Summary of Managing Change by Burnes, 5th edition - Donated to WorldSupporter
Organizations were unknown till the industrial revolution. Since 200 years ago, we have developed towards an organizational society.
This chapter: origins of organizations from 200 years ago till now.
Before the industrial revolution: there was especially small scale and self sufficient agricultural production and most people lived in the country side.
After the industrial revolution: most people live in urban cities and lived from industrial and commercial activities
Key development was the creation of the factory system in England; where the entrepreneur had ownership, means of work, source of power, and raw materials:
The international trade (textile) arose because of more demand. This led to specialization. New mechanism sprang up: a putting out system, large merchants put out work to smaller independent domestic producers.
Advantages for merchant: cheap, flexible, avoid difficulties of having employees
Disadvantages for merchant: dishonesty, deliveries too late, bad quality.
Therefore, merchants began a factory system
The relationship between employer and employees was based on two propositions:
Labour is unreliable, lazy and have to be tight controlled
Increase profits by decrease labour costs or increase productivity. Result: harder/more work for less money
Workers disliked the factory system compared with land work:
No more independency and control over their work
Long hours and bad conditions
Employees often modelled factories on workhouses or prisons
Systems were based on hierarchical and horizontal division of labour: specialization (Smith’s idea). Advantages were a learning curve, avoid loss time to move to another task, lead to invention of machines.
Wedgwood: split work process down into departments, each with its own supervisor
Babbage: 3 classes in work process
Entrepreneur (design machines and plan work)
Mass of employees
Change was forced by imposition rather than negotiation and agreement. There was a lot of protest on working patterns and methods (violence, turnover etc). High skilled employees gained more power. The reaction of employers was becoming less reliance on skilled labour by doing technological developments. Because of this history, people still feel apprehensive towards change.
Even in the end of the 19th century, there was still no accepted approach. There was still a battle between management and labour. Therefore, there was a great pressure to find a workable approach to organizational design and control that reduces the conflicts and is cost effective.
The classical approach (1920-1960):
There had to be a solution that was the one best way to all common problems. The classical approach is based on 3 propositions:
Organisations are rational entities: organizations are collections of individuals focused on achievement of specific goals through changing their organization into highly formalized, differentiated and efficient structures.
Design of organization is science: there is one best way for all bodies, which is based on hierarchical and horizontal division of labour and functions, organizations are like machines.
People are solely motivated by money. Therefore, jobs must be designed to minimize skills and maximize control.
Key figures in the classical approach:
Taylor’s scientific management (early 20th century, USA)
Systematic collection of knowledge about the work process by managers
Increased management control
Fully planned work by management, written instruction. Employees were human machines
Best result if you pay by results
But also management had to change. That’s why there was as well worker as managerial resistance.
1920: adoption in the USA and enthusiasm in Russia, but limited in Europe
After WWII: US promoted SM in Europe, influence because of Marshall plan
The Gilbreths and Motion study (1914): much work study (also central element of classical approach) owes its origin to the motion studies (1914). They developed a nr of procedures for breaking work down into small components, to discover the best method in performing a task. Human motion was split into operations, transportation, inspection, storage, and delay. Also selection criteria and environmental criteria analysed with the same determination.
Taylor: reduce time for task
Gilbreths: reduce motions taken for task
But their efforts were complementary.
Henri Fayol and the principles of organisations (early 20th century, France): focus on efficiency at organizational level instead of task level. But therefore complementary with Taylor. Both agree that there is need for professional educated managers who would follow the rules.
- Unity of command (one superior for every worker)
- Unity of direction (one leader for any group of activities)
- Organizational interests above individual or group interest
- Fair remuneration
- Degree of centralisation depends
- Respect for line authority
- Material and social order (avoidance of loss)
- Stable managerial team
- Esprit de corps (harmony and unity).
The roles of management are the following: forecasting and planning, organizing, commanding, coordination, control.
His believe: eliminate individual unrest by fairer, more consistent and firmer management. Managers have to be influenced indirectly by education (and not castigated, as Taylor thought). Managers’ and employees’ interests are not the same (what Taylor thought). Trade unions are not necessary.
Max Weber on bureaucracy (early 20th century, Germany): three pure types of legitimate authority:
Rational-legal: rests on belief in legality of patterns of normative rule (prevails in Western societies)
Traditional: rests on established belief in sanctity of immemorial traditions and the legitimacy of those exercising authority under them
Charismatic: rests on devotion to specific character of an individual and the normative patterns or order revealed by them
For Weber, legitimacy is central to almost all systems of authority. And under rational legal authorities, bureaucracy is most appropriate and efficient. It is characterised by division of labour, hierarchical authority structure, formal and unbiased selection procedures, employment decisions based on merit, career tracks for employees, detailed rules and regulations, impersonal relations and a separation of members’ organisational and personal lives.. Also, all human variability is eliminated. Especially for Germany, with the key objective to become an industrial power, it was important to ensure that all sections of the country pulled in the same direction bureaucracy was ideal tool for this. Both Fayol and Weber focused on the overall structure of the organisation and principles to guide managers to do that. Weber was never a manager himself.
Conclusions: the factory system emerged because it was more efficient, but especially because it was easier to control labour. Factory was battleground, employers want to change conditions and technology, and workers resist. Later in the 19th century, managers became aware of shortcomings of ad hoc and inconsistent response to new challenges and counterproductivity of resistance. Therefore, there was a search for legitimated managerial authority classical approach of Taylor (bottom-up), Gilbreths, Fayol (top-down) and Weber.
- One best way for all
- Rule of law and legitimate managerial authority
- Organizations are rational and pursuing rational goals
- People are just motivated by financial rewards
- Human fallibility and emotions should be eliminated
- Best way: hierarchical and horizontal division of labour.
Critics on the classical approach:
- One dimensional view of human motivation (Taylor)
- Principles are mere truisms, based on questionable premises and contradictory statements (Fayol)
- Bureaucracy is not always rational, lack of attention to social and informal processes, goal displacement (rules are end rather than means) (Weber)
- View of people is negative
Differences between different key figures of the classical approach:
Fayol support esprit the corps and individual initiative. Taylor and Weber find first irrelevant and second dangerous.
Unchanging rigidity of bureaucracy (Weber) leaves little scope for continuous search for improvement in methods and productivity (Taylor and Weber)
Taylor’s functional supervision (different supervisors for different aspects of job of one person) is different from unity of command, each worker just 1 supervisor only (Weber and Fayol)
From the 1920s until the 1960s, bureaucracy was seen as the ‘one best way’. Scientific Management had a more mixed reception. But from 1930 there was opposition against the classical approach. This opposition was based on three assertions (Barnard):
Organizations are cooperative systems instead of machines
People are motivated by range of rewards (not just monetary)
Motivation factors change over time
What emerged were 2 new approaches:
1. The Human Relations approach (1930s, Barnard key figure)
2. The Contingency approach (1960s, emerged out of dilemma of which approach to use, the Classical or HR approach)
The Human Relations approach
This approach is based on the evidence out of studies on (among other things) work fatigue that gave new insight into employee motivation. But also because the emergence of collectivism in the ‘30s in many countries (in the USA as a reaction to the Depression of the 20s and 30s). Mayo developed it in the USA (1933) and Myers in Britain (1934). People did not like the faceless, machine-like organisations that existed as a result of bureaucracy which increased the popularity of the HR approach.
People are emotional instead of economic rational beings: they have social needs and emotions can have more influence on motivation.
Organizations are cooperative, social systems instead of mechanical ones: importance of informal workplace and social groups
Organizations are composed of informal structures, rules and norms as well as formal practices and procedures: for these reasons, organizations can never be predictable.
The HR approach also has some similarities with the Classical approach:
Shared belief of organizations as closed and changeless entities
One best way for all
Some key figures in the HR approach:
Elton Mayo and the Hawthorne experiments (1920-1930): the HR approach begins with these experiments. Mayo wanted to implement the methods of Taylor and Ford but it was not the change in working conditions that affected output, but that the one involved had special attention (‘Hawthorne effect’).
2 major propositions that were core of HR:
Importance of informal groups within the organization: need to see work process as collective and cooperative one.
Humans have a deep need for recognition, security and belonging
Chester Bernard and cooperative systems (1938):
First to outline a theory of organisations as a whole in English (Weber was not translated yet)
An organization is a cooperative system because without the willingness of its members , it cannot operate effectively
To motivate people, there is need for a mix of monetary and non monetary incentives
He saw authority as something from the bottom up: as a response by subordinates to superiors. If they do not react willingly and appropriately, then there is no authority.
Systematic and purposeful (clear objectives!!) communication through formal and informal structures as key function of the executive and motivating people: reinforcing organizational cultures.
Successful leadership arose from interplay between the leader, the follower and the context (and not dependent on position).
Overlap with the Classical approach on clear objectives but difference is Barnard’s focus on non-rational, informal, interpersonal and moral basis of organisational life.
Maslow’s hierarchy of needs (1943): differentiate and classify types of human needs.
Physiological needs: hunger, thirst and sleep
Safety needs: security and protection
Social needs: belong, love and affection
Esteem needs: respected for achievements
Self actualisation needs: need to achieve full potential
It explains why in some situations Tayloristic incentives were effective, while in other situation other proved to be more important (Hawthorne studies). The strength of the hierarchy differs with individual circumstances and cultures. Maslow has had enormous impact on job design.
Douglas McGregor Theory X/ Theory Y: Decisions taken by top managers to manage people are based on their assumption about human nature. Two commonly held views are (page 68):
Theory X: negative view of labour as in the Classical approach. People dislike work, must be controlled and punished, try to avoid responsibility, place security above other factors and display little ambition.
-> Theory X led to organizations that restrict individual ability to exercise skills, discretion and control.
Theory Y: positive view of labour as in the HR approach. People can view work natural, are capable of self direction and self control, accept and seek responsibility, imagination, creativity and good decision making are widely dispersed throughout the population.
-> Theory Y will adopt more open and flexible management styles.
McGregor preferred theory Y, but choice lies with the manager.
Warren Bennis and the death of bureaucracy: bureaucracy was appropriate for 2/3 of the 20th century, but not anymore. Bureaucracy emerged as a creative response to needs and values of the Victorian age. Now, new conditions were emerging to which bureaucracy was no longer suited.
Rapid and unexpected change
Growth in size: than bureaucratic systems become less efficient
Increasing diversity: less standardization
Change in managerial behaviour: increasingly adopting HR
HR remained weak till the 1950s/1960s, because of lack of a clear operational definition and guidelines.
1950: Job Design to satisfy individual needs as well as job performance
Dvis and Canter (1955) questioned the Tayloristic basis of work organisation and job design and said it would be possible to design jobs that satisfied both organisational and human needs. They say the Classical approach is counterproductive to organisational performance and individual fulfilment because monotonous, boring, and meaningless jobs lead to poor mental health and feelings of dissatisfaction. That results in lack of motivation, absenteeism, labour turnover.
The three main variants of job design:
Job enlargement: increasing work variety
Job enrichment: increasing job control and responsibility
Socio technical systems theory: should let job design go hand in hand with technological change to let it be successful.
Reasons for high attention:
For better performance important to fulfil higher needs (Maslow)
Market become more global: workers have to be more flexible with a broader range of skills and teamwork
Low unemployment lead to high turnover and unrest in organizations with poor job design
The popularity of job design fluctuated with the employments level.
So, the 3 core elements of HR are:
Leadership and communication
Intrinsic job motivation
Organizational structures with flexibility and involvement
Underpinned by two central propositions:
Organisations are complex social systems
Human beings have emotional as well as economic needs
There was also some criticism on the HR approach:
It was popular because people were increasingly worried about the growth of impersonal bureaucracies
Economist reject that non material incentives have sometimes stronger motivating influence
Ignore outside world
People are not always irrational
Lack of empirical substance
It is also a one best way for all
The contingency approach (>1960):
The contingency approach emerged in the 1960s and since the 1970s more influential than the classical and HR approach. It rejects the idea of one best way, but believes that the structure and operations of an organization are dependent (contingent) on the situational variables. So there is one best way for each organization rather than for all organizations. The approach is based on systems theory, which says that organisations are open systems whose internal effectiveness and operations are dependent of the particular situational variables at any one time.
The 3 most important contingencies are:
Environmental uncertainty and dependence: as well inside as outside the organization
Size of the organization
Main figures in developing contingencies theory:
Tom Burns and George MacPherson Stalker (1961): the importance of the environment. Results: mechanistic structures are more effective in stable environment and organic structures are more effective in less predictable environments (p77)
Paul Lawrence and Jay Lorsch (1967): the case for environment continued. They were not only interested in the relation between environment and company structure but also how individual departments within the company respond to and organise themselves to cope with external environment.
How departments should be organized depends on differentiation (in how far are they separate from the rest of the organization) and integration (needed level of collaboration between departments).
The more diverse and dynamic the environment: the more the successful organization will be differentiated and highly integrated
The more stable environment: pressure for differentiation is less but the need for integration remains.
James Thompson environmental uncertainty and dependence (1967):
Although organizations are not rational, they strive so to be as effective and efficient as possible. To achieve this, they insulate their productive core from the uncertainty of the environment
Different level of organization need different structures
Organizational effectiveness is not just dependent on external environment uncertainty, but also degree of internal dependence that is present.
There are 3 types of internal dependence:
Pooled interdependence: each function is autonomous but together enable the firm to be effective -> requires standardisation, simple organisations
Sequential interdependence: output from one part is the input for another -> requires plans and written agreements, more complex organisations have this and pooled
Reciprocal interdependence: overall effectiveness requires direct interaction -> requires informal agreements, most complex organisations have all three types.
Joan Woodward (1960s) and the case for technology: successful firms adopt an organizational form that varied according to their main production technology (p81)
Small batch or unit: few hierarchical levels
Large batch or mass: larger spans of control
Process production (continuous flow): more standardisation
Charles Perrow and the case for technology continued (1970s): extended Joan Woodward’s work with 2 major dimensions:
Variability of work being carried: unpredictable incidence
Analysis and categorisation of technology: how far functions can be broken down and specified and whether problems can be solved through routine procedures.
The outcome is a continuum:
Routine non routine
Few problems <------------------------------> difficult problems
Dealt with by standard techniques varied solving techniques
Mechanistic structure organic structure
The Asten Group with the case for size (1960s): size as most powerful predictor of specialisation. Use of procedures and reliance on paperwork.
Large size: mechanistic
Small size: organic
So then, bureaucracy was not starving, but gave it new life.
Reasons for this:
Increased size: greater opportunities for specialisation
Large nr of staff: decentralised control system which lead to more administrative core (bureaucracy)
Organizations are open systems
Structure and performance depends on circumstances
No best way for all organization, but one best way for each organization
Rational: collect and analyze data and match these to an appropriate structural option
It was attractive because of the rapid economic and technological change. Also it was simpler to apply and understand than the HR approach. Third, it applies rationality to organisation design. Concerning implementation of an organisation structure and maintaining it appropriate according to circumstances it is similar to the Classical school.
No proof for link between structure and size and performance
No agreed definition on 3 key situational variables
No good definition for ‘good performance’
Formal organisational structure used for comparison but the actual operations may depend more on the informal structure
Structures may be strongly influenced by external variables
Managers have influence over not only structure but also situational variables
Danger of conflicting objectives and goals
Ignores complexity of organisational life.
So over the past 100 years design and management have moved from an ad hoc process to a highly complex process. So managers look for simple solutions which is why the Classical approach is so enduring. The HR approach tells how to have clear objectives, good communication and leadership but its implementation is difficult. Contingency theory does give a procedure for setting objectives but does also stay silent on planning and implementation.
Paradigm: a change in the mind of people (weltanschauung)
new ideas and framework for carrying out scientific work
a way of looking at and interpreting the world: a framework of basic assumptions, theories and models that are commonly and strongly shared and accepted
as situations change, existing paradigm lose relevance and new ones emerge
For example: the earth is not the middle point of the universe
1970s-1990s search for new paradigms apparent in USA:
competition of Japanese companies
return of unemployment and inflation
oil shocks which lighted western reliance on imported energy
days of mass production were over and future for variety, flexibility and customisation
->new techno-economic rationale is emerging due to enormous and rapid changes:
shift to info intensive instead of energy/material intensive products
shift from mass to more flexible production
more integrated processes within and outside company: for more rapid response
Search for new paradigm:
1.Culture excellence approach (1980s)
Arose to counter Japanese competitiveness by drawing on and re-shaping American and British traditions of individualism and liberalism.
Based on perspective of 3 key figures
Tom Peters and Robert Waterman’s search for excellence: study of determinants of organizational excellence. 4 soft S words (staff, style, shared values and skills) and 3 hard S words (strategy, structure, systems).
Conclusion: 4 soft S words held key to success; contradicts rational approaches from previous chapters. Rational approach should just be an aid to, rather than substitute, human judgement. Rational approach is flawed because it leads to:
- Wrong-headed analysis (be precise about the unknowable)
- Paralysis through analysis (applying rationale to such an extent that action stops and planning runs riot)
- Irrational rationality (rational techniques identify the ‘right’ answer irrespective of applicability to the situation)
There are 8 key attributes to achieve excellence:
Bias for action: make problem first manageable (chunking) and then tackle by small groups that are brought together for that purpose (project team/quality circle) rapid and appropriate response, achieve smallness
Close to customer: customer dictates product, quantity, quality, service
Autonomy and entrepreneurship: encourage entrepreneurship by autonomy and intensive, informal communication as control, championing system:
Product champion (fanatic who believes in a product)
Successful executing champion (has championed a product before)
Godfather (ageing leader who provides role model)
Productivity through people: treat workers with respect
Hands on, value driven: make sure everyone is driven by same mission, to ensure that first create coherence and homogeneity among senior management so that management speaks with one voice.
Stick to the knitting: do what you know best
Simple form, lean staff: production division: requires small lean staff on corporate and middle management: fewer administrators and more doers. Basic structure stays and rest evolves and changes around it
Simultaneous loose and tight properties: control tightly but encourage individual innovation, entrepreneurship and autonomy.
Therefore, excellent companies should be: flat, anti-hierarchical structures, innovation and entrepreneurship, small management staff, reward on contribution, brain power instead of muscle power, strong and flexible structures. Peter also says that organisational forgetting is more important than learning, innovation (autonomy and entrepreneurship) should be central.
Kanter’s post-entrepreneurial model: she called for post entrepreneurial organisations to overcome lack of competitiveness USA.
There are 3 main strategies:
Restricting the find synergies: identify and concentrate on core business area and remove all obstacles to their efficient and effective operation. Selling off non core activities and ensure that what remains is lean and efficient. So, create a flatter and more responsive and less complex organization.
Opening boundaries to form strategic alliances. By contracting out function there is need to pool resources with other organizations. As a result, structures and positions in the organization will change. 3 forms:
Service alliances (project with limited lifespan because resources are insufficient to do it individually, often R&D)
Opportunistic alliances (take advantage of opportunity)
Stakeholder alliances (continuing partnership between organisation and employees, customers, and suppliers)
Creating new ventures from within by encouraging innovation and entrepreneurship. Move innovation from specialised domains to centre
Post-entrepreneurial model has some consequences for employees:
Reward system: reward for contribution instead of position, p112
Individual performance bonuses
Venture returns method
Careers and job security: -> Traditional forms of career path threatened. People hopping from job to job rather than staying and climbing the ladder.
-> Skill development change: no specialism anymore, because it change all the time. People will join organization to develop their skills to enhance future employability (employability security instead of job security)
Workers lifestyle: with pay for performance, people have to work longer hours and social life arise more around the workplace
Kanter and Peter and Waterman think that bureaucratic organisations tifle creativity and innovation and they both call for radical change, innovation and entrepreneurship, culture and flexibility etc. Kanter differs in that she is aware of the downside of these developments. Kanter distinguished bold strokes (major strategic decisions or economic initiatives) and long marches (small-scale long-term initiatives, which can be complementary p 117). Also she looks at society as a whole and argues for an interventionist local state forming alliances with local private enterprises and manipulating the local economy.
Charles Handy’s emerging future organisation: also believed that the future organisation will be smaller, flexible and less hierarchical. Receive added value from knowledge and creativity rather than muscle power. But unlike Peters & Waterman, he recognizes that companies will continue to face different circumstances and therefore a need to respond in different manners. He distinguish 3 generic types of organisations instead of one best way:
The shamrock organization: three distinct groups of workers who are treated differently and have different expectations.
-> Small group of specialist core workers: form the brain of the organization. They are both specialist and generalist: run the organization and control machines that have replaced labour.
-> The contractual fringe: contracting out to individuals and other organisation of services and tasks previously done in house. Makes management easier, balance the workload and cheaper.
-> Flexible labour force: part time workers available for use on part time basis.
The Shamrock organization is big in output but small in nr of employees, because of outsourcing and machines. This lean, less hierarchical and less bureaucratic organization is well suited to high performing products and rapidly changing markets.
The federal organization: collection of network of individual organisations allied together with some shaped identity.
If Shamrock is too big, difficult to handle for core
Flexibility of smallness, but power of big cooperation.
“Inverted donut”, specify the core job, target, and quality standard and leave room to challenge and question existing ideas and to experiment.
Tripe I organization: more a set of principles instead of a structural model. Core workers use their Intelligence to analyse available Information to generate Ideas.
Triple I is added value. The new organisation will be dynamic and interactive, where information is open to all. Smarted machines should be invested in, skilled and smart people should control them and be rewarded equitably. So the organizations must be a learning organization. Handy differs from Kanter and Peters and Waterman in that he acknowledges that not all organisations will adopt the same form or move at the same pace. Also he sees the change as evolutionary as well as revolutionary. And he states explicitly (the others only hint) that everyone should be treated as an equal partner although some will be more equal than others (core workers more than contractual fringe). Later, Handy seemed to be scared of his own ideas and the fact that work becomes more important than family life (“money is the means for life and not the point of it”)
The reason for the emerge of the culture excellence approach is that old certainties had disappeared and the rise of new competitors.
The difference with other approaches is:
Level of sophistication and complexity of new organization
Integration of both internal functions and outside relationship
Grade of intelligence and skills required by the staff
Conditions of employment
Employability will be generic, employees will be seen as partners, autonomy and flexibility while controlling operations tightly through culture and values are characteristics of the organisation of the future.
There are also some similarities (especially Handy’s Shamrock type):
Entrepreneurial style of management
Stress on privileged core of skilled workers
Contracting out whole areas
-> Was already there in industrial organizations.
Weaknesses of the culture excellence approach:
People: contradictions in their role and behaviour. On the one hand, people are chief assets of the organization; while on the other hand, there are different grades, rewards are dissimilar and there is no real job security. This lead to competition which lead to conflict rather than cooperation.
Politics: they worsen political behaviour by and between individuals and groups. This damage both the organization as the individuals.
Culture: one best way for all organization, simple causal relationship between culture and performance
Differences between main proponents of Culture-Excellence: peters is a free market liberal. Kanter agrees but believes that local communities have a positive role in providing jobs. Handy is also committed to the free market but has doubts about the outcome of his prescriptions. One overall concern is that there is a trend in worsening job security in order to create a vast pool of underemployed labour that can be turned off.
2.The Japanese approach to management
Japan is still the second largest economy in the world. First it was a nationalistic society and there was obedience to authority. But it was sophisticated and well-educated despite its isolation. Internal tensions rose from the mid-19th century. The Japanese adopted Taylor’s Scientific Management principles and Japan moved from agrarian to industrial economy. American engineers (many from Hawthorne, familiar with the HR approach) improved quality and productivity in the Japanese economy.
The Japanese were able to blend the soft and hard Ss. Three factors are typical for the Japanese approach: teamwork, quality-consciousness, and flexibility. A summary of the Japanese approach can be found on page 135.
Factors that make the Japanese management approach successful can be separated in 2 categories:
Personnel issues: dedication, commitment and ability of Japanese workers: partly because of the culture and partly because of personnel policies.
Lifetime employment, internal labour market, teamwork and bonding, training and education etc. designed to install loyalty, security, commitment, cooperation and belief in improvement in employees.
Business practices and work systems
Long term planning: focus on building strong market position
Timeliness: faster in developing products (JIT production)
Quality: continuous improvement
Decision making: everyone in company is involved (Ringi system): slow process but mostly first time right.
The Japanese have a unique combination of hard and soft practices. Even while the culture plays also a part, the Japanese approach could also be successful outside of Japan (but could be difficult).
Japanese firms are very competitive, also with help from the government. They have a strong stimulating industrial policy. But now the Japanese economy is declining and banking scandals undermine their image. The reason is that the Japanese just focus on world class manufacturing but undermined other sectors as the service sector. There are pressures for change, especially in the area of personnel practices (lifetime employment, reward systems, and the treatment of female workers).
Criticism on Japanese approach:
2 tier labour market: one side good conditions and lifetime employment but on the other side less paid and les secure job for maturity.
Lifetime employment: sort of slaves, they cannot leave the organization
Merits of teamwork product of peer group pressure on individuals to improve performance
Lack of independent trade unions
Organisational learning (1990s):
Popular because of pace of change (complex environment) and rise of corporate Japan who also were fast in continuous improvement. Acknowledgement that promotion of collective learning is crucial has provided a bridge between western and Eastern approaches to managing organizations.
Organizational learning: concept to describe types of activities in organization. Attempts by organisations to become learning organizations.
Learning organization: particular type of organization which is good at organizational learning
Most influential writers:
Peter Senge: he combines the individualism of Culture Excellence Approach and knowledge generating ability of Japanese approach
Conclusion: 5 interrelated disciplines:
Personal mastery: individual growth and learning
Mental models: deep assumptions about how people see other people, situations and organizations
System thinking: fifth discipline that link all other together
Argyris and Schon: focus on learning styles of individuals and organisation rather than attributes, as Senge does. 3 levels of evolutionary mode of learning:
Level 1: single loop learning: adaptive learning, detecting and rectifying errors to ensure objectives are met
Level 2: double loop learning: challenging the appropriateness of organizational basic norms, values, policies and procedures that create standards
Level 3: triple loop learning: questioning the rational for the organization and radically transforming it
-> Level 3 allows the organization to create and transform its environment in allowing it to transform itself.
Cummings and Worley (p149): identify 5 organizational characteristics that promote organizational learning
Structure: flat and teamwork based
Info systems: rapid acquisition and sharing of information
Human Resource practices: reward systems based on sharing and acquisition of new skills and knowledge
Organizational culture: openness and creativity
Leadership: lead, promote and involved in organizational learning
Each organization can and should find its own way to become a learning organization. An organization can learn by developing a structure, strategy, culture or Human Resources practices.
As a summary, organizational learning aspects are:
Survival depends on the ability to learn faster than the environment changes
Learning is a collective process
Shift toward systems/triple loop thinking
By organizational learning, the ability to adapt quickly and to transform itself is necessary
Organization can adapt to, influence or even transform its environment
Criticism on organizational learning:
Complex: difficult to implement
Just new vocabulary for self development
No agreed definition
Scarcity of rigorous empirical research
Organizational learning is wrong name: people learn, not the organization
Organizational learning requires contradictive diversity of opinion and creating of consensus
Most theory from the US: culture dependent?
Assumption that all organizations operate in a fast moving environment
While the three approaches from this chapter (Culture Excellence, Japanese and organizational learning) are very different from the previous 3 (Classical, contingency, HR), there are also some similarities.
Japanese – Taylor: industrial concepts to study and design jobs
Culture Excellence – HR: emphasis on leadership and communication
Organizational learning based on methods of Japanese to gather information quickly
Organizational learning and Culture Excellence both importance of individuals in promoting innovation
Japanese and Culture excellence see also the importance of culture
But there are also clashes between the approaches:
Organizational learning stress that it is possible to shape and create the environment, while Culture Excellence state that the organization has just to adapt to the environment
Japanese favour direct continuous incremental change, organizational learning also continuous but undirected adaption.
Japanese lifetime employment and temporary jobs in culture excellence do not match
Japanese committed to growth and culture excellence to downsizing
On balance, they conflict with each other.
Japanese: hard and soft techniques: stress both innovation and stability
Culture Excellence: soft techniques, innovation, dynamics and unpredictability and role of culture
Organizational learning: learning as source of competitiveness
Japanese and Culture Excellence: excellence, importance of culture
They all advocate one best way
People: Culture Excellence and Japanese split people in privileged and non privileged with only in the Japanese approach job security for privileged. Very committed to work but less social time.
Politics: ignore the presence of conflict between managers and workers. They have unrealistic expectations
Culture: threat culture in rather simplistic fashion. But in reality, it is very difficult to define and change a culture
Culture excellence: combination of bold strokes and long marches: mixed and details are lacking
Organizational learning: vague and inconsistent how one leads to another (in change process) and how ultimate goal can be achieved
Japanese approach: more specific: create a future vision and moving toward it in incremental steps. Long term plan which is slowly but successful achieved
The world is changing: what worked in the past is not working anymore. Therefore, more companies are looking for realism and rejecting the grand visions of the 90s. Criticism of organisation theories can be found on page 167.
In this chapter 3 critical perspectives on organization theory will be discussed to understand how they view reality.
The postmodern perspective
It was the changing nature of work and the competition that forced organization to new organizational structures: from mass production to flexible production.
Some writers favour a Neo Tayloris/Fordist organization form: they argue that bureaucracy has not come to an end but just has changed: computerized automation (elimination of labour) and shifting production to low wage regions.
But, neo fordism has only limited ability to explain the many changes that are taking place in organizational life.
The interest in postmodernism comes from a growing belief that existing modernist theories could no longer account for changes taking place in the world: scepticism according to rational, objective science to provide absolute and unitary knowledge of the world.
Postmodernism believes in multiple realities, fragmentation and subjectivity.
Modernists believe that the world is accessible through scientific methods of observation and analysis. Rationality, logic, and the pursuit of scientific rules and principles are key. Postmodernists oppose this. It says scientific knowledge is a social construction by the scientific community, new scientific paradigms are brought about by changes in the community of scientists rather than scientific discoveries per se. Organizations will become fmore flexible and decentralised, with fuzzy boundaries both externally and internally. Leaders will be facilitators, communicating through informal, oral, and symbolic channels. Control will through self-regulation, planning, and
Features of postmodernism:
Fragmentation: breaking structures into fragments
De-differentiation: dissolution of established boundaries
Hyper reality: mixing of real with virtual realities
Chronology: interest in past and its imitation instead of the future
Pastiche: mixing of decoration, dress, expression etc.
Anti foundationalism: rejection of basics, absolutes, universals etc.
Pluralism: all above is happening simultaneously
There are two areas that get particular attention in postmodernism:
Culture: rejects integrationist perspective which sees culture as being shared by all member in the organization. It takes fragmentation perspective: organization cultures are inconsistent, ambiguous and in constant state of flux. Do not think of trying to manage a culture.
Power: less concerned with power that individuals or groups possess, acquire and deploy. But power and knowledge depends upon each other.
View of reality: comes as product of power and politics in organization instead of objective and rational process. Organizations, groups and individuals create their own reality.
Implications for organisations:
Nature of the organizational culture: manipulate and use language and symbols to create new organizational reality.
Power: when groups are able to wield power and political processes to achieve dominant position over other in the organization, their view of reality takes shape and comes to be accepted
Organizational choice: if organizational reality is socially constructed, then it is open to organizations to construct the reality they wish: so they have choice about what they do, how and where
Criticism on postmodernism:
Difficult to define the concept
Name: postmodern identifies itself with something it is not: modern
Never has never been a real modern era, so there cannot be a postmodern
Current developments are more extensions rather than significant break with the past
Some see globalization instead of postmodernism as characteristic of the new age
The realist approach
Alternative to both modernism and postmodernism: based on believe that to understand and explain events, it is necessary to take into account both social structures (routines, rules) and the meaning that individuals and groups apply to these. Social entities are real and can be discovered but that is not easy. The social world is a product of human action but exists independently of human beings.
Realism: events are generated by causal mechanism and causal powers that operate independently of the event they generate. Though these causal mechanisms possess certain capabilities, causal powers, the actual outcome of their operation will be dependent on circumstances. For example: because a person has a good relation with the bank manager, this does not mean by itself that the person will be able to obtain a loan (this depends on the rules of the bank and credit worthiness of the borrower).
Realists explain events by focusing on the mechanisms, structures, powers and relations that bring them about.
Realists share the role of culture, power and politics in organizational choice with postmodernists, but reject the multiple realities. Realists claim that there is 1 truth that can be found, but this can be difficult. Realists attacks modernism by placing too much reliance on science, rationality and logic.
The complexity perspective
Complexity theories are concerned with the emergence of order in dynamic nonlinear systems operating at the edge of chaos (for example weather system). Order manifests itself in largely unpredictable fashion, similar but irregular patterns of behaviour through a process of self organization, which is concerned by a small nr of simple order generating rules.
Organizations are also complex systems that need to operate at the edge of chaos and have to respond quickly and continuously to changes in the environment through process of spontaneous self organizing change.
There are three central concepts at the heart of complexity theories:
Chaos and order: chaos is not pure randomness but different form of order: chaos is complex, unpredictable and orderly disorder in which patterns of behaviour unfold in irregular but similar forms (for example snowflakes).
There are three types of order-disorder:
1 Stable equilibrium: these systems can become so stable that they ossify and die
2 Explosive instability: these systems can become too unstable and get out of control and destroy themselves
3 Bounded instability: complex systems that are torn between stability and instability and can transform themselves in order to survive.
Edge of chaos: systems are constantly poised under brink between order and chaos: at this edge, creativity and growth are optimal. Appropriate order generating rules allow systems to remain at the edge of chaos.
Order generating rules: in complex systems, these simple order generating rules permit chaos while providing relative order.
Implications for organizations:
Continuous innovation is necessary for survival: they operate at the edge of chaos. Self organising principles reject cause and effect, top down, command and control styles of management.
Managers have to rethink hierarchy and control and should learn to manage changing contexts, promote self organising contexts and learn: how to use small changes to create large effects destabilise the organization
Change should be between small incremental and large radical change: continuous change based on self organisation at team and group level
Order generating rules have to overcome the limitations of national, linear, top down, strategy driven approaches to change.
Criticism on complexity theories:
Approach requires a shift toward greater organizational democracy and power equalisation: goes far beyond flatter organizational structures and quality improvement structures. It is hard to achieve this realignments.
Be careful not to treat complexity theories as established, unitary, unquestioned and uncontroversial
Lack of clarity regarding how writer are treating complexity theories.
Conclusions of this chapter:
Postmodernism: which its denial of an absolute reality and promotion of competing and socially constructed multiple realities, offers enormous scope for the emergence of alternative strategies and choices. But is also stresses the important of culture, power and politics in how the strategies are selected, legitimized and how choices are made.
Realist: favour that there is just one reality but do not deny the social constructed nature of their reality.
-> Difference: postmodernist believe that anything is possible and realist believe that choice is limited by complex structures in natural and social world
Complex perspectives: sees organizations as complex, self organizing systems that need to function at the edge of chaos, with need of order generating rules. Choice moves from few too many: more democratic.
Similarities between all: organizations have a range of options and choices
Three arguments against one best way:
Why increased executive salaries so dramatically if it is so easy to just implement an easy recipe for success.
Why so wide disparity in organizational success and few achieve long term prosperity
Argument of postmodernism, realism and complexity: managers have wide degree of choice and discretion.
So, on what do managers base their choice: culture, power and politics
The cultural perspective
Work and the way it is done are governed, directed and tempered by an organizational culture: this is the prime mover in an organization.
Most accepted definition: culture refers to the unique configuration of norms, values, beliefs, ways of behaving and so on, that characterize the manner in which groups and individuals combine to get things done.
Much attention has been paid to rites, Trice and Beyer described the following:
Rites of passage: to facilitate and signal a change in status and role through events such as training and induction programs
Rites of questioning: to allow the status quo to be challenged through the use of, for instance, outside consultants
Rites of renewal: to enable the status quo to be updated and renewed through participative initiatives including strategy development, vision building, and job redesign programs
Key elements of culture:
Hofstede: 4 layered hierarchical model of culture, from deepest to surface
Values – rituals – heroes - symbols
Schein: three level model, from basic assumptions to artefacts
Beliefs – values - attitudes
Cummings & Huse: 4 major elements existing at different levels of awareness
Basic assumptions – values – norms – artifacts
Deal & Kennedy: 4 basic types of culture
Tough guy: macho culture
Work hard/play hard: low risk and quick feedback
Bet your company culture: high risk and long feedback time
Process culture: low risk and slow feedback
Quinn & McGrath: 4 types of culture
-> Market: rational decision making and goal oriented
-> Adhocracy: risk oriented and charismatic leaders
-> Clan: participation and consensus
-> Hierarchy: hierarchical, rule based and risk avoidance
Handy: 4 types of culture
Power: small entrepreneurial firm with 1 powerful figure in the centre
Role: bureaucracy most dominant in mechanic structures (mechanistic end in continuum Burns and Stalker)
Task: job or project oriented. Focused on that task is done rather than how it should be done. Flexibility and team working most dominant in organic structures (organic end in continuum Burns and Stalker)
Person: individual wishes are focus of this for. Rare culture.
Hofstede: national culture differ along different variables
Wilson: culture perspectives:
Integration perspective: a culture is strong if there is organistaion wide consensus and consistency
Differentiation perspective: consensus only occurs within the boundaries of a subculture. Differentiated subcultures may co-exist in harmony, conflict, or indifferences.
Fragmentation perspective: ambiguity is the norm, consensus and dissension co-exist in a constantly fluctuating pattern influenced by events and specific areas of decision making.
Jones et al: organizational culture inventory classifications:
Constructive cultures: members encourage to interact and meet higher-order satisfaction needs (achievement, affiliative, humanistic-encouraging, self-actualization cultures)
Passive/defensive cultures: members believe that interaction must occur in defensive ways that will not threaten their own security (approval, avoidance, conventional, dependent cultures)
Aggressive/defensive cultures: members are expected to approach tasks in forceful ways to protects status and security (competitive, oppositional, perfectionist, and power cultures)
Implications for organizations:
Behavior is not a direct reaction to intrinsic and extrinsic motivators but is shaped by shared values, beliefs and assumptions
There are particular types of cultural attributes that are peculiar to top-performing organisations
Culture guides the actions of an organisation’s members without the need for detailed instructions or long meetings and reduces the level of ambiguity and misunderstanding between functions and departments. So it provides a common context and purpose if there is a strong culture.
It is possible to change or manage a culture
Changing an organizational culture:
Organizational culture should match organizational structure. If the structure is mechanistic, role cultures are appropriate and this combination is suitable for a stable environment. Organic structures with task cultures are suitable for leas-predictable (highly dynamic) environments (page 209). So an organisation should change the culture if the existing culture is no longer fit for purpose and is having a detrimental effect on its competitive performance. Some say culture is not changeable, others disagree. The realists are in between: culture as a whole cannot be changes but certain key elements (norms of behaviour) can be influenced by management.
Approaches for changing culture:
Dobson: 4 step approach to culture change:
Change recruitment, selection and redundancy policies
Reorganise workforce: certain people on position of influence
Communicate new values
Change systems, procedures and personnel policies
Cummings and Worley: 6 steps, wider in scope but very similar.
Top management commitment
Change at highest level
Modify organization to support change
Select newcomers and terminate deviants
Develop ethical and legal sensitivity
Browns: organization must be sure that problems are actual caused by existing culture before changing this
Schwartz and Davis: when organization is considering any form of change, compare strategic significance of change with cultural resistance = cultural risk approach
Schein: treat developments of culture as adaptive and tangible learning process: his approach emphasis the way in which an organization communicates its culture to new recruits.
Different approaches, but compatible: decide if culture needs to change and if yes, how?!
Reservations to cultural changes:
Negative side to creating strong culture: make the organization resistant to certain types of change. Strong culture especially important in begin years of the firm to hold it together, but later (when it became differentiated org) strong overall culture is usefulness
Besides one strong culture, there are always subcultures: this can lead to conflict
Even is cultural change is successful, it takes a long time
Just short time benefits, on longer term stagnation
Employees have emotional stake with current culture. Changing it can lead to uncertainty, anxiety and pain.
Some belief that culture cannot be changed of managed
Culture change is mind control; ethical issue
Argues that organizations act irrationally: goals emerge through process of negotiation and influence.
Firms are competing and shifting coalitions of multiple conflicting interests, whose demands and objectives are constantly (but imperfectly) reconciled and rationally limited. Managers have to satisfy instead of searching for the best solution.
Importance of power politics perspective: even when there is a strong culture, the cohesiveness, willingness and stability of organizational members is unlikely to be uniform.
Cooperation and commitments depends on if the goals are consistent with their interests. What is rational from one point of view is not from another: rationality depends on preferences.
Managers are more involved in political behaviour and see it as a typical party of organizational life.
Power: the capacity of an individual to influence decisions. Not necessarily linked to position.
Authority: the right to act or command other, toward the attainment of organizational goals. This is based on the position in an organization.
Power: capacity to influence decisions
Politics: actual process of exerting this influence. Activities taken within organization to acquire, develop and use power to obtain preferred outcomes where there is uncertainty about choices. With the use of different plays and tactics.
Reason: facts and information to mount seemingly logical or rational arguments
Friendliness: use of flattery etc prior to making a request
Coalition: joining forces with others so as to increase one’s own influence
Bargaining: exchanging benefits and favours in order to achieve a particular outcome
Assertiveness: being forceful in making requests and demanding compliance
Higher authority: gaining the support of superiors for a particular course of action
Sanctions: using the promise of rewards of the threat of punishment to force compliance
Different views on political behaviour:
Goes against formal organizational goals and interests
Due to failure of management: lack of clear goals and policies
Construction of organizational goals itself is political process
Conflict is necessary to save organization from decline
Degree to which use of power/politics have negative or positive effects depends on type of power and how it is used:
Coercive power: threat of negative consequences
Remunerative power: promise of material rewards
Normative power: allocation and manipulation of symbolic rewards
Knowledge power: by the control of information
Other tactics (dirty tricks such as coercion, undermining the expertise of others, playing ne group off against another etc)
Power and tactics can be used to pursue their own selfish interests but also for resolving conflicts. It can also be used to enable people to manage change more effectively. Using power is a social process. To get things done in interdependent systems.
Postmodernist believe that power is the mechanism by which groups in organizations create their view of reality and this allows dominant groups to influence others.
There are differences between postmodern, realist, complexity, culture and power-politics perspectives but also strong overlaps
-> Management of meaning and creation of legitimacy through the construction and manipulation of symbols in an area of common ground.
The view that choices are an outcome of political processes instead of rational analysis has implications for organizational theory. Managerial aspirations and interest are more important than otherwise would be the case.
Substantial portion of variability in structure is explained by those who are in position of power choosing a structure instead of just size, environment, technology and strategy. However, technology and environment are chosen till certain degrees.
Partly rational, partly power political
The power-politics perspective does not totally undermine the case against the rational view of management but it might explain the dismal long-term performance of some companies because executives are pursuing their own short-term interests rather than the long-term interests of their organisation.
2 interesting points to make:
Argued that culture and structure need to be supportive to operate efficient/effective. If structure is at least partly an outcome of self interested choice by dominant coalition, than, the degree of congruence between the 2 is more accidental than designed.
Organizational culture is a product of long term social learning in which dominant coalitions play a key role. But coalitions change their composition and priorities over time. Therefore, there’s only possibility for effective structure-culture nexus if dominant coalition holds sway and is consistent in its aim over longer periods of time. But this is an exception. This theory leads to problems when leaders change.
In chapter 1-3 it is argued that managers are just acting rational
In chapter 4 and 5 it is argued that managers have choice (to a certain point)
The degree to which culture influences behaviour, depends on the presence of clear and consistent organization goals. If these are not present, then conflict emerges. In this situation, political perspective describes how decisions are taken.
So it is possible that decisions upon structure and behaviour they want to promote are made and then they shape the conditions and contingencies to suit these instead of the other way round as argued in the contingency approach.
No matter if decision makers operate rationally or are influenced by personal considerations or organizational culture: to succeed there must be consistency and coherence to the decisions taken, there must be a strategy.
There is modern business strategy since the industrial revolution (Chandler). Strategic management became a quantitatively oriented discipline: focus on use of numerical analysis to forecast market trends in order to plan for the future .
Main influence is the Harvard Business School’s approach to business policy teaching: they focused on management away from internal organizational issues toward external orientation. This led to the development of two concepts:
-> Interconnectedness internal and external forces
To cope with new technological, economic and organizational developments after the WWII, organizations began to adopt long range planning techniques with the focus of reducing the gap between expected demand and actual demand.
But this failed for different reasons:
Planning systems involved mainly past sales trends
Little attention for external economic, social and technological trends
Unforeseen opportunity and threats occur
Late 1960s: slower growth and increased competition: rise of multinational conglomerates operating in wide range of industries and markets. Managers now have a portfolio of businesses. And the concept of strategic management began to emerge.
Strategic management focus on environmental assumptions that underlie market trends and based in possibility that change in trends can and do take place: ultimate focus on winning market share of competitors.
Rational process whereby managers gather quantitative data and come to rational decision based on this info.
Late 1970s: the rational perspective came under attack:
Hard data were no longer reliable
Organizations and managers are no rational entities: no rational decision making
Organizational strategy emerge from unplanned actions and unintended consequences as well as process of planning and implementation
There are many concepts of strategy: none is universally accepted.
In the early 60’s, there were 2 schools of thoughts:
Planning school (Ansoff): formal procedures, training, analysis and large dose of quantification: strategy can work in the same way as a machine. There were strategic planning departments with the focus to match products to markets (just external focus). Page 252.
Design school (Chandler, Mintzberg): need to fit between internal capabilities and external possibilities (SWOT).
Organizational structure should flow from strategy instead of one best way
Visible hand of management more important than hand of market
Large organizations should decentralize to remain competitive focus: on totality of organizational domain, internal and external focus.
According to Mintzberg, there are 5 definitions of strategy:
Plan: strategy is intended course of action, created ahead of events
Ploy: a manoeuvre to outwit an opponent
Pattern: consciously or not, organizations exhibits a consistent pattern of behaviour
Position: positioning the organization in order to achieve a sustainable competitive advantage: achieve position where competitors cannot challenge them
Perspective: abstract concept in people’s mind: common view of purpose and direction that informs and guides decision making and action
Johnson has 3 basic views of strategy:
Rationalistic view: strategy as outcome of pre-planned action designed to achieve goals.
Adaptive/incremental view: strategy evolves through small changes over time
Interpretative view: strategy as product of individual and collective attempts to interpret events.
Morgan has 8 metaphors for strategy:
Postmodernist: Bit like postmodernist viewpoint: different definitions as competing realities which managers attempt to impose the organization.
Realists acknowledge that there are different perspectives influences organizational strategy but there is one real world out there which has to be addressed to successfully realize strategy
Complexity theorists similar to realists
Therefore, there were also very different definitions of strategy. But in general, the characteristics of strategy are:
Concerns full scope of organizational activities
Process of matching organization activities to environment
Process matching organization activities to resource capabilities
Have major resource implications
Affecting organizational decisions
Affected by organizational values and beliefs
Affecting long term direction of the organization
Is strategy a process or the outcome of a process?
Is strategy an economic/rational phenomenon or organizational/social phenomenon?
2 competing streams:
Prescriptive stream: strategy as controlled, intentional and prescriptive process based on rationality which produce complete deliberate strategies
Analytical stream: interested in how organizations formulate strategy: outcome of complex social and political process involved in decision making.
Prescriptive stream (planning and design):
The prescriptive stream grew out of long term planning activities of the 1940s and 1950s. This stream dominated in the 1960 and 1970s. It was thought that the strategy was only useful in relation to market share and profit maximization.
Critics: it is not delivering competitiveness
Then, a new variant emerged: positioning school: only a few key strategies are desirable in any given industry the ones that defend against the competitors (instead of design school who says that strategy have to be unique). Positioning school created set of tools to matching right strategy to the conditions.
3 reasons for its success in the 60 and 70s:
Provide industries with blueprint for strategy formulation and implementation
Close with leading consultants who promote work
They were able to promote and develop their strategy
Analytical stream (1970s):
Strategy as outcome of a process: focus on organizational and social aspects of strategy formation. Capabilities of organization restrict the strategic options that the organization can pursue.
Mintzberg: emergent strategy: intended strategy -> unrealised strategy or deliberate strategy -> combined with emergent strategy = realised strategy (page 258).
Example is Japanese management: Japanese success not based on well thought strategy but on strategic intent: commitment of Japanese management to create a vision of desired future: vision is used to bind the organization together. Core competencies are crucial to a firm’s strategy. A vision is very important and should consciously be pursued. That lacks in the emergent strategy concept.
The key part is the identification and development of the core competences and capabilities that are necessary for achievement of the organizational vision. Competitiveness depends on uniqueness/strengths of capabilities instead of on the strategic plan.
Like emergent strategies: difference with Japanese management is that in emergent strategies there is a lack of vision and intention.
Mintzberg: some organization pursue an umbrella strategy: broad outline is deliberate while details emerge
Kay: similar to Mintzberg: development of capabilities is/can be a planned process
Complexity theorists: do not have a common view on organization strategy
Population ecologists: both planned as unplanned process: fit between the organization and environment most important. Organizational survival depends on planned/unplanned actions, activities of other organizations in the field and luck
Williamson/Weick: unrealistic and impossible to make detailed plan in ambiguous world
Child: equifinality: goes against idea of correspondence. The quasi ideal match
Pettigrew: organizations have to be understood in context of constraints and possibilities offered by the environment in relation with self interest of individuals/groups that comprise them. Organization as political systems where groups/individuals mobilize support for strategies/actions that promote their self interest
Child and Smith: more realist perspective: stronger link between firm and sector and less on political behaviour. The sector determines the path a firm must take. Child and Smith are analytical stream but more focus on rational progression than for example Pettigrew.
Objective conditions for success: each firm within a sector may pursue a different strategy but all are determined by similar success factors such as customer satisfaction, quality, etc. So behaviour should be appropriate to those environmental conditions.
Prevailing managerial consensus: sector bears external exemplar to which the firm can be compared.
Collaborative networks operating in the sector: firms are joined in patterns of cooperation and affiliation with other firms in the sector, so the sector is also a network of potential and actual collaborators. This collaboration can be with customers, suppliers, outside experts or even competitors.
There is a clear distinction between those who adhere the prescriptive and analytical approach. But it is not clear how there is a degree of a common understanding under the analytical umbrella.
Is there one best way for a strategy?
Equifinality: different sorts of internal arrangements are perfectly compatible with identical contextual or environmental states different approaches to strategy may be compatible with positive outcomes. Especially if you think of an organization that are constrained by circumstances. But managers also have the ability to manipulate/influence these circumstances to their own benefits. So there is managerial choice, but how much?
4 generic approaches to strategy:
Classical approach: strategy as rational process to achieve maximal profits -> Planning, design and positioning
Evolutionary approach: successful strategies cannot be planned but emerge from decisions managers take to align the organization to changing environments -> Complexity, population ecologist, Mintzberg
Processual approach: strategy is pragmatic process of trial and error aimed at achieving compromise between needs of the market and objective of the organization: learning and adapting -> Mintzberg, Pettigrew, postmodernist
Systematic approach: strategy can be a deliberate process and planning is possible but only if the conditions in the host society are favourable: depends on the social context. -> Realist, Japanese approach
Differences on several aspects:
- Evolutionary and classical: maximize profits
- Processual and systematic: also for example stability, environmental responsibility
- Process, classical, evolutionary and processual: one best way
- Systematic: contingency perspective
- Classical and systematic: strategy is rational/intentional in development and objectives
- Processualists: not rational in development and objectives
- Evolutionist: not rational in process but rational in outcome: profit maximization as only outcome that guarantee survival
Managerial choice and judgement
- Classical: neither
- Evolutionist: manager percipient in making decisions to threats and opportunities, but at end of the day: lucky manager may be more desirable than an able one
- Processualist: managers percipient in key decision making
- Systematic: choice and judgement important, but constrained by limits and objectives of the society.
But choice is limited:
National objectives, practices and cultures
Industry and sector practices and norms
Business environment: stability and predictability influences the ability to plan and predict. Manipulating the environment can reduce the uncertainty.
- Structure: mechanic/ organic
- Politics: self interest of organizational objectives
- Managerial style:
Transactional style: optimising performance of the organization within existing policy (classical and maybe systematic)
Transformational style: create new visions (processual/evolutionary)
The type of strategic approach is managerial choice, but this choice is constrained by a variety of factors, as are the outcomes. Organizations and managers may be able to influence or change the constraints.
Both choice and manipulation should be seen in relativity:
Classical approach is still dominated
Managers tendency to satisfice: accept first satisfactory solution
Decisions often not taken but happen
Though potential for choice exist: in reality many managers do not use it: stick to routine, tried and tested approaches regardless of their suitability.
There are 3 approaches:
Rational, mathematical: quantitative
Human creativity: qualitative
Choice and preference
In chapter 6: the main perspectives on strategy are discussed: the 2 streams of thoughts.
The analytical stream won the academic arguments during the last 20 years, but the prescriptive stream had more impact on the practice of strategy.
There are three basic types of strategies that organizations adopt in practice:
Competitive forces model: stems from positioning school: since then dominant (1980s)
Need to align the organization with its environment: industry structure influence the strategy
Closely to Porter’s 5 forces model: these 5 factors have organizations take into account when developing a strategy.
Strategy to maximize value of capabilities that distinguish it from competitors
This approach also has a link with the contingency model and Child and Smith firm in sector perspective.
Too narrow and inflexible
Ignores political nature of the organization
Ignores learning and creativity
Just focused on big businesses, where market power is great
Lack of socio-political factors
Lack of longitudinal focus
Underestimate the importance of core competences
Resource based model: profitability comes from effective deployment of superior resources that allow firms to have lower costs or better products. Firms are heterogeneous: there are no two firms with the same combination of resources.
Organisations should discard activities that are not part of the core business and not build on their core competences.
Lack of empirical support
Complex and ambiguous definitions of resources
Rehash of SWOT
Resources cannot easily be developed: firms stuck with ones they have
Therefore, beneficial match between organizational competences and environment more accidental then foresightful actions of managers
Strategic conflict model: attention to dynamic nature of strategy and need to respond to competitors who does not always behave as anticipated.
Firms can increase profit by influencing actions and behaviour of rivals and thus manipulate market environment. For example, by investment in capacity, R&D or advertisement.
Actions are dependent on what a firm think that the other firm will do in a specific situation (prisoners dilemma).
Strategic manoeuvring fits with positioning school but more based on quick wittedness, gut instinct and emotional elements of decision making (analytical stream).
Strategic conflict model is the most useful when there is even balance between rivals instead of substantial competitive advantage of 1 firm over its rivals (then better resource model)
Ignores wide range of internal and external factors that also contribute to organizational competitiveness.
Conflict model: short term focus
Competitive forces model: medium term focus
Resource mode: long term focus
There are 3 levels of strategic decision making in organizations. Each level has its own concerns, strategic tools, techniques and approaches. The levels interact in a iterative fashion. So higher level emerge from lower levels and lower levels driven by higher levels.
Corporate level: concern the direction, composition and coordination of various businesses and activities that comprise a large organization.
There are 6 different strategies at the corporate level:
Stability: keep organization stable
Portfolio: growth through merger, acquisition instead of internal growth
Harvesting: reducing investment in a business/area/activity to reduce costs or improve cash flow
Combination: above strategies can be linked in whatever combinations
Competitive forces model applicable to all strategies. Conflict and resources more to situations were growth is pursued.
Now more negative view of corporate strategy: increased responsibility for strategy to business level
Business level: operation and direction of each of the individual businesses within a group of companies. Different ways on individual business can compete in its chosen markets.
3 strategies for above average performance (Porter)
Cost leadership: lower cost at same quality
Product differentiation: different and superior products
Specialisation by focus: select on certain market or product. By focusing feasible to dominate in this area.
The strategies cannot be mixed, otherwise you will stick in the middle, according to Porter. But other arguments are against this.
Functional level: concerns individual business functions and processes as finance, marketing, etc.
Functional level most neglected by western firms: should just adjust to priorities set by higher levels. But Japanese strong integrated corporate, business and functional level strategies.
The appropriateness of any strategy depends on the nature of societal, sector, environmental and organization constraints of the organization. Success requires a fit between internal structures and external environment. Internal structures should also change if environment change: therefore functional level also important.
Miles and Snow do not classify types or levels of strategy that organizations can adopt, but classify organizations themselves strategic types, based on rate at which an organization changes it products or markets.
4 strategic types:
Defenders: seek internal stability and efficiency by producing limited set of products in narrow but stable segment of markets which they defend aggressively: bureaucratic, hierarchical and control
Prospectors: opposite of defenders: intern flexibility to develop new products for dynamic environment: loose structure, flat organization
Analysers: best of both above: minimize risk and maximize profit. Move into new markets after viability is proven by prospectors: moderate centralized, tight control over current activities but looser over new activities.
Reactors: residual strategy: inconsistent patterns, pursuing all 3 strategies erratically. Perform poorly in general.
Similarities Porter and Miles and Snow: successful firms pursue 1 of 2 strategies: innovative or stability
Covin: selection of strategy reflect its basic nature (=culture); selection is driven by organization culture and leadership style.
Waldersee & Sheaters: managerial style follows strategy type instead of the other way round.
There are several tools to select and construct organizational strategies. All these tools have a quantitative or qualitative bias. Now there is an increasing focus on qualitative tools, because of the failure of quantitative approaches and because of growing interest in conflict and resource approaches.
The 3 most used tools:
Profit impact on marketing strategy (PIMS, 1972): identify characteristics of business and its market that determine profitability. Understanding these will aid a company to become more profitable. 3 factors that determine business unit performance:
2 key assumptions of the model:
All business situations are basically alike and obey same laws of the marketplace
Future will resemble the past
PIMS collects info from member companies (market share, profitability etc) and the result is an answer on questions as normal profit rate, what strategic changes are likely to improve in performance
Uses historic data no consideration for future changes: only useful in stable environment
Highly analytical: tendency for managers not to question outcomes
Most factors that governs forecasts of model are out of control of the company
Finding a correlation instead of assuming a causation
Based on premise that business problems are orderly and structured and everything is well specified.
Focused on corporate and business strategies and biased to large organizations that have significant presence in the markets. But little relevance for new, small or innovative businesses seeking to enter new markets.
Growth share matrix: arose from experience curve and sustainable growth formula
Experience curve: as cumulative production doubles, costs of production decrease by constant percentage. If costs fall in relation to production volume, then costs must be a function of market share. Organizations with highest market share have highest competitive advantage and highest profit margins.
Sustainable growth formula: companies with highest rate of return on investment can grow the fastest.
Each business or portfolio can be classified in 4 categories:
-> Stars: use and generate large amount of cash. Make necessary investments to maintain/improve position
-> Cash cows: market leader in market where growth is declining: lower costs and higher profits than competitors. These businesses are cash rich, use this to develop the rest
-> Dog: poor profit and less change to improve because low growth potential. Cash required often exceeds cash generated: best to sell off
-> Problem child: require high cash to keep on course but less profitable because of low share. Invest to turn into star or sell off because of uncertainty.
This makes it possible to predict how the organization will develop as the market change: can be an aid for strategic planning, investment decisions.
Simplistic, undermines uniqueness of organization
Difficulty in defining and measuring variables
Growth and share are not the only predictors
Especially useful for large organizations that have already a significant presence in the market
Scenario/vision building approach (1970s): based on the assumption that in a changing and uncertain world, you cannot predict the future, but by considering a range of possible futures perhaps the right future can be identified.
There are 2 main scenario building approached:
Delphi method: panel of experts thinking about nr of future issues within their area of expertise
Cross impact method: panel of experts assign subjective probability and time priorities to a list of potential future events supplied by the organization
Vision building: organization exists in multiple realities and organizations have the ability to create their own reality. Vision building is a process that assists organizations to select the reality that most suits their needs.
Prone to subjectivity and bias
Experience is not always best teacher
Participants can be strongly influenced by personal interest in preference of scenario
Process is time consuming
How much scenarios and how to use them
Vision require strong visionary leaders, which are in short supply
It can be applied in wide range of situation, no restrictions or biases as 2 tools before
In West: approaches, tools and techniques of the prescriptive stream are preferred. Also because large pressure of consultants, business schools and large companies. But resource and conflict approach growing last 15 years: more emergent process.
Both analytical and prescriptive stream are useful, depends also on the circumstances and constraints. Organizations have a choice.
Choosing is one thing, implementing a second thing: the prescriptive and analytical streams have almost an opposite perspective on the implementation.
Prescriptive: implementation flows from organization strategic plan
Analytical: strategy emerge from actions and decisions; adapt themselves to the circumstances
Chapter 6 & 7 were especially focused on approaches to determine and charting organization strategic direction.
Chapter 8 & 9 focus on approaches to plan and implement the changes required to achieve or shape strategic objectives
Change management is not rigid and clearly defined. It draws on social science disciplines and traditions.
3 schools of thoughts that are the basis for change management theory:
Individual perspective school: split into 2 camps
Behaviourists: see behaviour as result from individual interaction with environment. All behaviour is learned, individual is passive and just react on external data.
Humans are conditioned by expecting consequences. To change behaviour, change the conditions that cause it (like classical approach: human as machines).
Gestalt Field psychologists: individual behaviour is product of environment and reasons. Learning is process of changing insights, expectations or thought patterns. Not only action and response important, but also individual interpretations.
Group dynamics school: (based on Lewin)
Bringing about change through teams and work groups: people in organization work in groups, therefore individual behaviour must be seen, modified and changed in light of groups’ practices and norms.
Group behaviour affects group structures but also individual behaviour. So, individual behaviour is function of group environment.
To bring about change, focus should be on influencing and changing groups’ norms, roles and values.
Group dynamics school is very influential in theory and practice of change management. Because organizations see themselves more as comprising groups than collective of individuals
Open system school: sees organisations as an entity: nr of interconnected sub systems. Change in one part influences other parts of a system and overall performance. But also see organizations as open systems
Open to interact with the environment
Open internally: subsystems interact with each other.
Emphasis is on the overall synergy: overall business strategy
Principals of organization subsystems:
Organizational goals and values of the subsystem
Technical subsystem: combination of knowledge, techniques and technologies which organizations requires to function
Psychosocial subsystem: organizational climate and culture
Managerial subsystem: spans entire organization: responsible for directing an organization and attains its objectives.
3 factors of open system school:
Subsystems are interdependent: if one part changes, then take into account the consequences for other subsystems.
Training is unlikely to succeed on its own because it concentrates on individuals
To be successful, organizations should tap and direct energy and talent of their workforce: positive reinforcement
Dynamic and complex relationship: easily to get lost in these
High level of abstraction: not concrete to use in practice
Conclusions when we look at the different schools:
All schools (except behavioural) are in sharp contrast with mechanistic approach of the classical school. They provide many aspects of modern paradigm (learning, teamwork).
Each school is focused on different aspects of organizational life and has therefore different implications for change that take place and how it is managed
Each school sees itself as the most effective, but they are complementary approaches.
-> Key tasks is to find circumstances in which each approach is appropriate
Planned approach to organizational change:
Most closely approach associated with Organizational Development (OD)
Lots of models and techniques to OD. These share some common concepts with human relations movement. But OD movement grew out of Lewin’s work of behavioural science.
Lewin and planned change:
Lewin believed that key to resolve social conflict is to facilitate learning and enable individuals to understand and restructure their perceptions of the world around them: influenced by Gestalt psychologists.
His field theory, action research, group dynamics and 3 step model are unified whole: supporting and reinforcing each other. All are necessary to understand planned change.
Field theory: approach to understand group behaviour by map out totally and complexity of field in which behaviour takes place. Individual behaviour is a function of group environment. So changes in behaviour come from changes in the field. A field is in constant state of adaption: quasi stationary equilibrium.
Group dynamics: describing importance of a group in shaping behaviour of its members. Group behaviour should be the main focus of change: especially norms, values and interactions: create disequilibrium and change.
Field theory and group dynamics: understand and analyse groups. But understanding of dynamics of the group is not sufficient to bring about change: also need to provide process whereby members could be engaged and committed to changing their behaviour. Therefore the action research and 3 step model (models to change group behaviour).
Action research: process to allow groups to address answer on question. Action research emphasis that:
Change requires action, and is directed at achieving this
Successful action is based on analyzing the situation correctly: identifying alternative solutions and choose the best
There has to be a ’felt-need’: inner realisation that change is necessary.
Foundation for action research is in Gestalt psychology.
-> Change successful achieved by helping individuals to reflect on and gain new insights into totality of the situation. Action research is a iterative process of planning, action and evaluation of results and actions.
You cannot understand an organization without trying to change it: understanding and learning that this process produces for the individual and groups concerned, which then feeds into changed behaviour is more important than any resulting change as such.
But change is often short lived: groups soon returns to previous level. Therefore, permanency at the new level school is included in the objective: reason for 3 step model of change!
3 step model of change:
Unfreezing: disconfirmation, induction of guilt or survival anxiety, psychological safety
Moving: identify all available options, research, action, more research
Refreezing: stabilise group at new quasi stationary equilibrium (change organizational culture, norms, policies and practices)
OD is especially based on the 3 step model and not integrated packages of all Lewin’s work. Because 3 step model is underdeveloped, OD practitioners have sought to develop it further.
Phases of planned change:
Writers expanded the 3 step mode: lot of different models
Bullock and Batten developed a 4 phase model of planned change.
This model is based on 2 dimensions:
Change phases: states the organization moves through as it undertakes planned change
Change processes: methods used to move organization from one state to another
Exploration phase: explore if the organization wants to make specific changes and if so: commit resources to planning the changes. Become aware of the needs and search for assistance.
Planning phase: understanding the problem, establish change goals and design action
Action phase: implement changes: manage change process and gain support for actions and evaluating so that necessary adjustments can be made
Integrations phase: if changes have been successfully implemented, then stabilising this changes. Reinforce new behaviours and monitor changes.
Organizational development (OD):
OD is a process that applies behavioural science knowledge and practices to help organizations achieve greater effectiveness. Original focus on work groups and human processes and systems within the organization. In recent years, there has been a shift in focus from group to organization setting and even beyond.
3 developments that caused this broad perspective:
Rise of job design movement in 1960 and socio-technical systems theory: caused understanding that OD could not focus on groups and individuals but also needed to look at other systems. Gradually, OD adopted open system perspective.
Organization wide perspective caused OD to broaden out their perspective in 2 ways:
Increased interest in organizational culture: from groups norms to org culture
Increased interest in organizational learning: from group learning to org learning
Organization wide approach and increasing turbulence in environment: need for OD to become involved in transforming organization as a whole instead of constituent parts.
This move to a more organization and system wide perspective created some dilemmas:
Much of the traditional OD had become accepted practice in organizations: these that focus more on group. However, the more organization wide approached (which are more crucial now for org) are less clear, developed and accepted.
The more the focus is on the macro level, the less it can keep in touch with all the individuals affected by the change programmes and less able to promote its core values: which are humanist and democratic values.
Planned change and OD are strong humanist and democratic orientations with emphasis on organizational effectiveness.
OD has developed planned change over the years, in which the participatory and democratic nature is changed.
-> Especially in the role of the change agent:
Lewin: problem solving through dialogue: active participation of change adopter. Change agent as facilitator: task to develop those involved and create a learning environment, which make people willing to change
Bullock and Batten’s model: consultant has a more directive and less developmental role. Consultant is a equal partner, rather than facilitator: free to direct and do as other involved. Those involved are more dependent of change agent, for skills of analysis and providing solutions and implement them. Employees have less participatory role, because shift is more from individuals and groups to organization.
Lewin was based on Gestalt psychologists: change is process of learning and reasoning
OC is moving to more behaviourist direction: focus less on people oriented values
Criticism on planned approach:
Much of OD is developed for top-down, rigid organizations. In the turbulent and chaotic world of nowadays; organizational change is more continuous and open ended.
Emphasis of incremental and isolated change and inability to incorporate radical and transformational change.
Ignores organizational conflict and politics, or at least think that problems can be easily identified and resolved: easy to reach common agreement
Planned change is suitable were more directive approaches are required: larger scale and transformational
Less appropriate for systems wide change
Lewin never saw planned change as appropriate in all situation: it was not meant to be used in rapid and whole sale changes. But after the 70s small group view of change began to be replaced by one which saw change as more frequent and of greater magnitude.
Frequency and magnitude of organizational change:
There is a strong disagreement about the nature and pace of change that organizations experience. There are 3 current models that are prominent in literature:
Incremental model of change: change is a process whereby parts of organizations deal incrementally and separately with one problem and one goal at a time. By responding to pressures in internal and external environment: organization becomes transformed. Planned change sits very comfortable with this view.
The punctuated equilibrium model of organizational transformation: organizations evolve through long periods of stability and are punctuated by short bursts of fundamental change: disrupt current patterns and install basis for a new equilibrium period. But little research has explored the empirical validity of the model’s basic argument.
Continuous transformation model of change: to survive, organizations must change themselves continuously in a fundamental manner, especially in fast moving sectors. Because environments keeps on changing, rapidly and unpredictable, continuous transformation is needed for organizations to keep it aligned with the environment. Main promoters of this model are the culture excellence school and complexity theorists (edge of chaos).
There is growing support for punctuated equilibrium and continuous transformation models: this led to a search of a more appropriate approach to change the Lewin and OD.
With the shift in focus from Lewin’s planned change to OD: shift from more conflict resolution to performance enhancement. Therefore is there a distinction between components of planned change (Lewin and early OD), who has analytical approach and those with a more prescriptive approach; especially those selling their services as change consultants.
1960/1970s: planned change dominant approach
1980s: criticism on planned change: inability to cope with radical, coercive change situation where power and politics are dominant.
-> new approaches have gained ground: punctuated equilibrium and continuous change.
Organizations today are less stable and enduring institutions and more work in progress subject to continuous change.
Planned approach (chapter 8) dominated till 1980s. Since then, the emergent approach is more dominant, because it is more suitable to turbulent environments and sees change more as a political process.
Case against the planned approach to organizational change:
Culture Excellence approach: Lewin’s model is too simple and inappropriate
Processual approach: change is complex and dynamic: should not be treated as series of linear events. There is need to incorporate analysis of politics of managing change.
Postmodernists: power is central feature of change, arises from the socially constructed nature of organizational life.
From early 1980s: there is a consensus against planned change, but all from a different perspectives.
However, they have two common beliefs:
They see change as an emerging and ongoing process of organizational adaption and transformations instead of something that can be pre-planned and has a start and end
Open systems perspective: organization is a part of a larger environment
Emergent approach to change:
Change is continuous, dynamic and contested process that emerges in an unpredictable and unplanned fashion.
!The basis for the emergent approach came from the belief that key decisions about matching organizational resources with opportunities, constraints and demands in the environment evolve over the time and are the outcome of cultural and political processes in organizations!
Increasingly dynamic and uncertain nature of business environment undermines the case for planned change
Planned change relies too much on managers: which are assumed to have full understanding
Even in stable situations: change is emergent, messy and unpredictable
Processualists: One of the main strands of emergent change is provided by processual analysts who reject the prescriptive recipe drive approach to change: they focus on the interrelatedness of individuals, groups, organizations and society. Change is a complex mix of rational decision processes, individual perceptions, political struggles and coalition building. Change is a process that unfolds through interplay of multiple variables within an organization.
Dawson: processual approach to change that is less prescriptive and more analytical and better able to achieve broader understanding of the problems and practices of managing change within a complex environment: complexity, power politics.
Postmodernists: struggle for power and domination is the central feature of change in organizations.
Differences processualists and postmodernists:
Processualists: political nature of change close off options
Postmodernists: presence of conflicting interest gives people new possibilities and ideas to choose from
Pugh/Hardy: organizations are occupational systems and political systems as well as systems with rational decision making: rational and occupational systems need to be considered alongside.
The change process itself:
Emergent perspective rejects simple taxonomies of change and approaches as TQM, which follows series of steps.
Emergent changes need constant to be redefined and developed to maintain relevance. Advocates of emergent change adopt a contingency perspective: tailored to the situation. The role of managers is important in this.
An important question from the system perspective: to what extent drives the environment changes within a system (organization), and to what extent is the system in control of its own change processes. Organization creates environment and environment creates the organization.
To cope with uncertainty and complexity: organization need to become a open learning system. This is a bottom up approach to implement change, because:
Rapid reaction on environment
Changes continue at all local levels
The role of the senior manager is empowering people instead of controlling people.
The degree to create a climate receptive to change depends on:
Key players in the organizations prepared for gathering info on organizational positions to increase openness.
Degree of info gathering and this integrated with central business operations
Extent of environmental pressures are recognized
Structural and cultural characteristics of the organization
The concepts of self organizing and emergent change are similar.
Advocates of emergent change have a wide variety of backgrounds and all have different views on how organizations should be managed. But there are some core similarities:
Structure: more flexible, less hierarchical: increased responsiveness by devolving authority and responsibility.
Semi-structured: sufficient rigid to organize change but not so that change cannot occur
-> stable part (specialists’ functions) and variable part (integrating mechanisms: networks across the functions).
Create network (synergy across functions) organization to enhance customer responsiveness
But not all organizations need such a structure to survive:
Depends on instability of environment
Organization can choose to reduce instability instead of adapt to it
There are different internal arrangement compatible with external turbulence (flat hierarchy is just 1)
Culture: for change to be successful, it must be anchored in the organizational culture. Organizational processes are embedded in organization context, inclusive the culture: therefore change can be slow. Therefore there is need to challenge reinforcement mechanisms of old behaviour (this is where resistance can be expected).
Other writers believe that you just have to restructure: this forces new attitudes and behaviour upon people
Organizational learning: learning plays a key role in preparing people for change. Questioning of status quo to build momentum for change.
Effective organizations encourage and support learning from change: open management style, encouraging initiative and risk is needed.
Managerial behaviour: managers as facilitators and coaches: bring together and empower teams to identify need for change and achieve change. It is necessary to develop leadership skills: expertise in strategic formulation, HRM, marketing/sales, conflict resolution etc. But key to success is the manager’s own behaviour.
Move to certain to uncertainty: managers have to tolerate risk
Perspective of emergent approach: move to strategic vision by many small scale incremental changes: managers must ensure that those concerned have access and be able to act on all available info.
Perspective of complexity: reject large and small scale change. Prefer a third kind which lies between those two: continuous change based on self organisation at team/group level
-> more difference of terminology.
General agreement: successful change comes from bottom up: emerge from local responses: this size of responses vary, but never be large scale.
To cope with resistance; managers need skills to deal with this.
Power and politics: from proponents of emergent change: different views on power and politics. But all see the importance and need to manage it.
Political skills of managers:
Ability to utilise resources
Ability to understand and manage political processes
Recognize and engage in various forms of political activity
Recipes for emergent change:
Sequences of action which organizations should follow.
Pettigrew and Whipp: 5 interrelated factors
Environmental assessment: collect info
Leading change: create positive climate for change
Link strategic and operational change: these 2 influences each other
Human resources as assets and liabilities: good combination and need good management
Coherence of purpose: decisions and action from above factors have to reinforce each other
Problems with much of advice of emergent approach: too general, difficult to apply.
Useful guidance: Kanter and Kotter
Kanter: long march vs. bold stroke
Kotter: 8 step model
Role of the change agent:
Change has to be managed: need for someone who takes responsibility
Emergent approach: change is important part of every manager’s role
Ignores specialist skills necessary to manage skills
Little research on roles of change agent
Buchanan and Boddy: model of change agents: expertise which identifies skills and competences that are necessary to achieve successful change.
Outcome: change agent as highly skilled and trained political operator with knowledge of change processes and tools and personal qualities and experience to use them in the open and behind the scene. The change agent is not neutral, but has its own agenda.
Argument of many in the Emergent School: complexity ensures that change cannot be left to few expert but is the responsibility of everyone in the organization. The more complex the change process: the greater the need to utilise skills and experience of the change agent.
Conclusion: there is one best type of change agent who possesses a generic set of high level competences that can be employed in any situation.
Caldwell takes issue with Buchanan and Boddy: she calls for contingency model of change agency
4 groups of model of change agents:
Leadership models: change agent as senior managers responsible for change
Management models: middle manager as change agent responsible for specific elements of change
Consultancy models: external and internal consultant who can be called to operate at any level
Team mode: change agents are teams that operate at various levels: composed of managers, employees and consultants that are necessary to accomplish the change
Summary emergent change:
Proponents of emergent change are disparate group that is united by scepticism to planned change. But they also have some agreements.
Organizational change is continuous process: adaption
Small change changes which over the long time can lead to major transformation
Change is a multilevel and cross organizational process: iterative
Political social process is analytical rational
Role of managers is not change persé, but creating organizational structure and climate that encourage experimentation, risk taking and learning
Managers as facilitators
Key organizational activities to operate successfully:
-> Emergent approach is based on the assumption that all organizations operate in a turbulent, dynamic and unpredictable environment
Criticism on emergent change:
Not all organizations operate in a turbulent environment
All different objectives and perspectives in proponents of emergent approach
Same as culture excellence school criticism (h3)
Impact of experience on managerial learning: experience may be a barrier to learning: shapes how managers see and interpret the world
Managers need to change behaviour themselves the most: but it is possible that they do not accept that
Planned approach attacked on simple 3 step model. But emergent approaches make also use of such a 3 stage model: transition with beginning, middle and end.
Over focus on political aspects of change: over-socialized model
Not universally applicable: especially for organizations in dynamic environment which require continuous transformation
Therefore not applicable for organizations in environments which require disjointed incremental or punctuated equilibrium change programmes
Not applicable for changes at individual or group level
This chapter identifies a range of change situations that organizations face and match this to approaches to manage it.
Varieties of change:
Types of change can be categorized to whether their focus applies to individuals, groups or systems. Models of change can be categorized as punctuated equilibrium models, continuous transformation models or incremental models.
Changes in composition and tasks
BPR (business process re-engineering)
Grundy: 3 categories:
Smooth incremental: slow, evolutionary, systematic
Bumpy incremental: periods of smooth flows of change
Discontinuous: punctuated equilibrium
Long march vs. Bold stroke
Theory O vs. Theory E
Cummings and Worley: continuum
Incremental – fine tuning – quantum- fundamental
Stace and Dunphy: continuum
Fine tuning – incremental adjustment – modular transformation – corporate transformation
Etc. But the end product would be the same: a continuum from incremental to transformational
-> individuals and groups
-> entire organization
A framework for change:
(Please refer to: A framework for change, Burnes (2009))
In this framework are three continuums combined:
Environment: turbulent – stable
Change: slow – rapid
Transformation: large scale – small scale & slow – rapid
Different kind of changes go often hand in hand: identify the main focus of the change
Umbrella strategies: as well intentional as emergent: outlines decide at corporate level, implementation comprises interrelated series of change initiatives (lower level)
-> Theory E and O or long march and bold stroke in tandem
Framework of choice:
Extent in which managers should stick at approaches of the change framework or can choose approach by themselves depends on:
If the preferred strategy do not fit with environment, then they should try to influence/manipulate/recreate the environment that it will suit
How long the organization can work with structures/cultures etc that are out of line with its environment: total alignment is not always necessary.
Debate between planned and emergent change is too narrow
Also other approaches: coercive/ directive
It assumes that change is unidirectional: driven by the environment. But there is choice.
Organizations do have considerable scope for changing or influencing the constraints they face but, despite what the postmodernists may claim, there are some constraints that appear beyond the scope of individual organizations or even entire industries to change.
Change management need not to be seen as a mechanism for achieving a predicted outcome (planned change) or as a continuous process of matching the organization with its environment (emergent change). This chapter will show that by linking change management with managerial choice, organizations have a much wider spectrum of options.
Organizations may choose to restructure their internal operations and practices to align them with the external environment but they can also choose to change external and internal conditions and constraints in order to avoid extensive internal disturbance or bring the constraints into line with their preferred modus operandi.
It is the role of managers to explore and identify all the available options.
Choice management – change management model:
Organizational change can be seen as a product of three interdependent organizational process:
Choice process: relates to the nature, scope and focus of organizational decision making
Trajectory process: relates to organization’s past and future direction and is seen as the result of its vision, purpose and future objectives
Change process: relates to approaches to, mechanisms for achieving, and outcomes of change
These processes are interdependent; each process includes elements or forces which interact, clash with and influence each other.
It is this interaction that prevents decision making and change management from being a totally rational mechanical process and ensures that they are based on subjective and imperfect judgment.
The choice process consist of 3 elements
Organizational context: organizations should know their own strengths and weaknesses, their customer’s needs and the nature of the environment in which they operate. Two wide used tools for this purpose are the SWOT analysis and the PESTEL framework.
When facing a mismatch between the organization and its environment, some managers will seek to achieve realignment by influencing the environment rather than pursuing an internal upheaval that may involves changes in management style and personnel. An organization’s management style also influences how and by whom information is gathered and discussed. And there will always be an element of subjectivity in the process of info collection and analyzing.
Therefore, a key task of managers is sense making: making sense of the organization’s world for themselves and others in such a way that it provides a rationale and justification for past, present and future actions.
Focus of choice: a concentrated and coordinated approach, which focuses on small numbers of issues at the same time is more effective than a fragmented one.
Organizational trajectory: trajectory/direction is shaped by its past actions and future goals and strategies. An organization’s trajectory can be seen as a blend of the deliberate and emergent elements of its strategy.
Each of the three elements of the choice process interacts with each other. There is a tendency for managers to ‘muddle through’ rather than attempt an exhaustive examination of all available options.
The Japanese ringi system (strong corporate visions and clear strategies) is very useful for decision making. Japanese do not have to explore all the possibilities when taking decisions, merely those that are in harmony with their vision/strategy. In this way, the choice process is simplified.
While the choice process is uncertain, complex and time consuming, there are approaches to reduce this and make the process more effective.
The trajectory process consists of 3 elements:
Vision: by constructing a vision, the organization has a picture of what it wishes to become and some concrete targets to aim for. Visions are the intent, and it is through the development of strategy that visions are brought to life.
Strategy: consistent stream of actions(formal and informal) to move towards the organizational vision. It is only when a course of action is pursued, that organizations begin to change and move towards their vision.
Change: visions and strategies can be crucial in shaping the organization’s life, it is only when the organization changes that the visions and strategies become reality. It is a 2 way street:
Visions and strategies shape and direct change
Changes shape visions and strategies (make them reality)
The change process consists of 3 interlinked elements:
Objectives and outcomes: a lot of changes fail because their objectives or desired outcome were ill-thought or inconsistent. Burnes suggested an approach to assess the need for and type of change that attempts to make the process of establishing objectives and outcomes more open. Burnes’ approach has 4 elements:
Trigger: organizations should only investigate change if there is a trigger (vision/strategy highlight need for change, problems in performance/operations or opportunities arise)
Remit: this should state clear the reasons for the assessment, its objectives and timescale and who should be involved. Focus on the people aspect as well as the technical aspects involved. There must be clarity and agreement about who has the responsibility and authority to initiate change before the assessment begins.
The assessment team: this is the body (multi-disciplinary team) which will assess the need for change.
The assessment: the assessment consist of the following steps
Clarification of the problem or opportunity
Investigate alternative solutions
Recommendations and decisions
Planning the change: 6 interrelated activities that make up the planning:
Establish a change management team: right blend of skills
Managing structures: effective reporting and management structures need to be put in place in advance in order to provide direction, support, resources and decisive interventions
Activity planning: constructing a schedule for the change program.
Commitment planning: identify key people whose commitment is needed and decide how to gain their support.
Audits and post audits: monitor progress and see if objectives are being met
Training and development: new skills and competences that might be necessary.
-> planning change is also a very people issue
People: in every change process there are people related activities that need to be undertaken:
Creating a willingness to change
Make people aware of the pressures for change
Give regular feedback on the performance of individual processes and areas of activity within the organization
Understand people’s fears and concerns
Publicise successful change
Involving people: to gain people’s understanding of the need for change.
Getting people involved
Sustaining the momentum:
Provide resource to change
Give support to change agents
Develop new competences and skills
Reinforce desired behaviour
Looking at all these interrelated elements, we see why changes are so complex and so many fail.
Even after a project has been finished, the story does not end there. There always remains scope for improvements.
This model incorporate and go beyond both the planned and emergent approach to strategy and change and demonstrate how managers can attempt to change their organization’s circumstances to fit them to the approach that best suited them.
One important difference between this model and other models is that it recognizes that managers are active players instead of passive spectator in the development of the organization.
The choice management-change management model resolves the dispute between proponents of planned and emergent approaches.
The biggest challenge for managers nowadays is globalisation. Organizations have to come to terms with the changing nature of domestic and international trade. Allied to globalisation, are three other challenges:
Sustainability: managers cannot divorce their actions from the wider impact they have on society and they can also not ignore the fact that a sustainable future for their organizations requires a sustainable future for the world. Both incremental as transformational approaches can be used to create sustainable organizations. The appropriateness depends on the circumstances.
Workforce diversity: globalisation is intensifying workforce diversity in 3 ways:
Companies are being owned and managed by people from different countries and cultures. Companies are also increasingly buying products and services form oversees
Migration and recruitment of workers from other countries
Increased participation of women and minority groups in the workforce
Managing diversity is about how to manage effectively relationships between various people but also about developing appropriate approaches to managing differences.
Organizations have to treat workers differently because of their diversity, but treating them all fairly.
Business ethics: all business should have them, and all business have difficulty abiding by them. Organizations should change managerial behaviour so that business ethics become business practices.
There is a clash between those who see management as a rational, science based process and those who see it as more intuitive and less rational.
Duncan tries to overcome this conflict by taking a holistic view on the job of managers. He divides 3 levels of management activity:
Philosophical: goal formation: formulate strategies and values and priorities
Scientific: goal accomplishment and evaluation: develop plans, methods and techniques and establish procedures for monitoring and evaluating
Art: implementation of decisions: tactical and administrative decisions to deploy the org resources and reach operational efficiency. Art because you need particular talent to persuade others than goals and decisions should be accepted.
-> this model very useful in that it shows that management is both a science and a art. The extent to which a manager is involved in these levels depends on the situation and organization. The greatest influence is his position in the hierarchy.
The 3 main hierarchical levels in the organization are:
Top management: responsible for overall direction of the organization
Middle management: responsible for successful operation of assigned department
First level or supervisory management: responsible for execution to the middle management.
Although much managerial work is unprogrammed, all managers do have regular duties
Managers simply respond to pressures or demands of their jobs
Managerial activities are characterized by brevity, variety and discontinuity
-> others have similar outcomes
Yukl’s work confirms Mintzberg’s findings and thinks that their work can be described in 10 very important roles. These roles can be categorised in three headings:
Interpersonal roles: to work with, direct and represent people
Figurehead: formal representative of the organisation
Liaison: forming connections with other organisations
Leader: in relation to members of a group within the organisation
Informational roles: To obtain information
Monitor: see, receive and store information
Disseminator: broadcast useful information to the organisation
Spokesperson: communicates information to other relevant groups and bodies, internal en external
Decision making roles: Take decisions.
Entrepreneur: looking for ways to improve operation of organisation
Disturbulance-handler: handle crises effectively
Resource allocator: constructing budgets and allocating resources
Negotiator: spend great deal of time as negotiator because they have necessary information
The emphasis and importance varies between managers because of organisational size, level of management, etc.
Steward drew especially attention to demands, constraints and choices in shaping managerial roles:
Demands: expectations that those in positions of power have for a role holder
Constraints: peculiar to the organisation and its environment that limit a manager’s freedom of manoeuvre
Choices: degree of discretion in what to do and when
Major factor which distinguishes successful organisations from less successful counterparts is the presence of dynamic and effective leadership
Nahavandi (2003) makes the difference between
leaders: long term
managers: short term
It is possible to divide researchers on leadership and management in three main groups:
personal characteristics and process of leadership: Focus mainly on personal qualities or personality traits (extroversion, dominance)
early investigation: If a person does not have appropriate personal attributes, it is unlikely to be a good manager.
Newer perspective: View that leadership behaviour rather than attributes may be more effectively in predicting leadership success. Two different classes of behaviour are especially important in predicting effective leadership:
Consideration: the relationship between the leader and subordinates, and the degree of respect from the leader to the subordinates
Initiating structure: degree to which the leader define and structure the work of himself and the subordinates towards achieving goals.
Participation: democratic leadership resulted in the best results. Key elements of participation are involvement, empowerment and group decision making.
The most influential theories on effective leader behaviour is Blake and Mouton’s (1969, 1985) Managerial Grid/leadership grid. The grid has two dimensions:
concern for people
concern for production.
Based on this they identified 5 different styles of leadership:
Team management: high concern for people and high concern for production: subordinates commitment to achieving assigned tasks.
Country club management: high for people low for production: achieve harmony by satisfying people’s needs.
Middle-of-the-road management: moderate for people and moderate for production: avoid difficulties or contentious issues.
Task management: high for production low for people: achieve high productivity
Impoverished management: low for both production and people: exacting the minimum effort from subordinates to achieve the required result.
They think the most effective leader is both task and people oriented (high-high).
While managers have a dominant style, they can switch if their preferred style does not work in a certain situation. The dominant style is influenced by personal and management values and the personal and organizational history.
Because of the difficulty of traits and behaviour to effective leadership, many researches try to investigate the relationship between leaders and subordinates.
Leader-follower situation: Because of inabilities in ‘one best way approaches’, attention began more to focus on the situations in which leaders were effective. To investigate how the behaviour of a leader varies between subordinates.
The basic principle is that leaders develop a different relationship with each subordinate (close and trusting relationship or more distant and formal relationship). There are 3 situational variables/contingencies:
Subordinate considerations: experience and abilities
Superior considerations: amount of influence of subordinate on leader behaviour
Task considerations: time urgency, external stress, autonomy, importance
The effectiveness of the 2 forms of leadership behaviour (consideration and initiating structure), is moderated by the 3 factors that are mentioned above.
The most influential situational theory is Fiedler’s Least Preferred Co-worker Model (LPC). Leaders have personal characteristics that influence behaviour, which you cannot change. Both leaders and subordinates have to learn to live with this. The LPC model measures if a leader is ‘task’ or ‘relationship’ orientated. High LPC ‘people orientated’, low LPC ‘task’ orientated.
It depends what is needed by the situation, but it important to match the leader to the situation. Three important aspects of the work situation that determined the effectiveness of particular leadership are:
Leader follower relationship
Leader’s formal position and power
Together there are 8 (2x2x2) types of work situations.
Criticism on this model: lack of empirical support, fails in explaining how leadership behaviour affects subordinates’ behaviour, ignores manager’s ability to change or influence factors.
Contextual approach: something that is ignored above, but that is also important is that manager’s effectiveness also depends on the nature of the organization. Therefore, a manager’s effectiveness is determined by:
The nature of the organisation in which he or she operates
The qualities of the individual manager
The contextual approach is a variant of the leader-follower approach, but with focus on leadership style (i.e. behaviour) and on the overall organisation context and climate(i.e. the leader-follower situation). In addition, it incorporates change as a variable.
Convergent: when there is a stable conditions and established and accepted goals, the most appropriate management style is transactional (maintaining the status quo). Managers exchange rewards for subordinates’ performance. The focus is on task completion, goal clarification, structures and practices.
Divergent: when environment changes challenges the efficiency and appropriateness of goals, structures and the ways of working, transformational leadership is the most effective management style.
The key issue is to find the optimal balance between transactional and transformational skills in any given situation.
Kanter: 2 basic models: ‘corpocrat’ and ‘cowboy’. In the future, organizations require managers who combine the best of both the corpocrat and the cowboy.
The implications of all these findings for manager and leadership:
The contextual approach tries to incorporate and linking it to the wider organisation.
No universal rules for what is effective manager or leader.
Effectiveness is situation dependent.
In training and development there is a need to recognize to tailor development programmes to the person and the situation
Results of some case studies
Managers can change their style of management or leadership, but also use the different styles to different parts of the organization at the same time (planned and emergent approaches simultaneously or alternately)
Managers create situations where the context is changed to suit their preferred approaches to management and change
Managers have great difficulty in changing their leadership approach or influencing the circumstances
There is a tendency in the West towards more rational-analytical ways of working, where in Japan/China there is more a subjective decision making process.
Kirton’s adaptation-innovation theory: people exhibit different degrees of creativity, but also express it in different ways.
Adaptors are efficient, tend to conform to existing norms and like to deal with only a few ideas at time (transactional management)
Innovators tends to ignore or challenge the system and to come up with radical proposal for change (transformational leadership)
Management development programmes are to be successful in producing effective managers and improving the performance of organizations. These programmes vary from company to company, but also from individual to individual.
In terms of changing managerial behaviour, action learning is also important. Action learning is a method for problem solving and learning in groups to bring about changes in individuals, teams or organizations.
- Actional learning places heavy emphasis on self-reflection, behavioural change and learning
- It focus on change on the group level
7 factors are important for a manager to operate effectively:
- Managers past experience
- Level of creativity of manager: and the preference for transactional management or transformational leadership
- Cognitive style: adaptor or innovator
- Ability to see the organization in the context
- Organisational context: amenable to more critical, creative, ethical style of leadership
- Organisational managements team: is it promoting sustainability, diversity and ethical behaviour
- Organisations management development process: effective or not
A framework for management, leadership and change
The literature on management has shown the following things:
- Incredible variety and complexity on the role of managers.
- The wide range of factors that have an effect on managerial effectiveness
- The ability or potential of managers to increase their level of creativity and change their style of management from transactional to transformational and back
- Management development has a key role to play in developing individual creativity, but also in changing the ethical behaviour of management as a group in organisations.