Page 118 - Managing Change in Organizations

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Radical or transformational change
3 Integrated external knowledge.
4 Integrated internal knowledge.
But he also argues that radical change can be achieved by a more effective under-
standing of economic activities as whole systems. He argues that organizations
within a supply chain are within a complex web of activities and often conse-
quences within such webs are counterintuitive. Take the following example I
heard from the chief executive officer of a global logistics business. He was man-
aging a port for his business at which they landed goods from a ship from the
USA daily. The cost of doing so each day was £1 million. He noted that the ‘dwell
time’ (of the landed goods remaining in port) was five days. By focusing on dwell
time he was able to reduce the frequency of shipping to once every two days,
thus making substantial savings. When he first proposed the idea there was
major opposition on the grounds that this reduced customer service. By reducing
‘dwell time’ he enhanced customer service directly and was able to invest some
of the savings in customer service enhancement.
Arguably, what we are discussing is the ability to recognize and harness dis-
continuities externally and internally. Gilbert and Strebel (1989) refer to the idea
of ‘outpacing’, which they define as ‘the explicit capability of a company to gain
product leadership and cost leadership simultaneously’. In effect they argue that
those seeking radical change cannot afford to adopt traditional one-paced strate-
gies. Success in radical changes comes to those who can integrate approaches
which traditionally have been seen as incompatible. This is likely to result in a
change which outpaces competitors – changing the ‘rules of the game’ in the
industry or sector. Their observation of 100 companies identified common capa-
bilities for successful organizations:
■ the ability to innovate;
■ the ability to configure and deliver a competitive offering;
■ the ability to do so at a competitive price;
■ the ability to perform these moves simultaneously.
They illustrate this with the case of Nintendo. Through the ability to develop and

deliver hand-held electronic games, Nintendo became the largest toy manufacturer
globally in 1988, having not been in the top 10 in 1983. They explain this in terms
of the ability to simultaneously develop hand-held games – attractive to young
people thanks to high-quality images – to drive down costs via supply arrange-
ments and to price competitively. Similar conclusions might also be offered to
explain the success of Benetton and Ikea!
The vital argument here is that to be successful radical change demands balance,
integration and simultaneous actions. Ansoff and McDonnell (1990) contrast
American and Japanese models of decision-making, noting that Japanese managers
operate parallel activities, i.e. they begin to launch implementation activities before
decisions are finalized. At that time American managers would not do so, thus put-
ting more pressure on the decision process, often leading to less commitment to the
decision and less effective implementation. This resonates with the conclusions of
Clark (1995). For him, organizations where knowledge is a premium, which operate
in uncertain and complex environments, cannot be managed by planning and

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