Page 358 - Managing Change in Organizations

CarnCh19v3qxd 3/30/07 4:40 PM Page 341

‘Market-induced’ change
CASE
STUDY Reuters

Reuters provides a broad range of information and news services for global markets.
Formerly a newspaper news agency, it is part of a rapidly changing business sector expe-
riencing rapid changes in technology, merging of formerly separable sectors (print,
radio, video, information services), globalization of TV services including news in partic-
ular, new competitors and so on.
Clearly there is a need to manage creative people and creative output. Like many of
its competitors it has sought to create a highly flexible and organic structure. It operates
on the basis of ‘front-line business units’ supported by corporate control, dealing with
finance, legal, tax, etc., and global supplies, offering marketing, development and oper-
ations support services.
In the business units, rapidly changing demands have meant that teams must be built
and reformed rapidly. Decision making is widely dispersed and there are few levels in the
structure. The demands of the task in hand take priority; there are few organizational
rules other than those related to schedules and the technology in use. The issue is that of
balancing the need for creativity against the need for structure, schedules, etc. Thus two
points emerge from this case study. In rapidly changing markets, overly elaborate corpo-
rate structures can inhibit creativity and market responsiveness. Conversely, however,
providers of information services must place high value on service reliability including
availability. Thus time, from the client’s perspective, is a key issue. Moreover, investment
levels are often substantial and this latter point argues for planned change. One cannot
justify and manage multi-million-dollar investments as market-induced changes. Thus
balance between planned and market-induced models of change is very important.

However, this should not mislead us. We are discussing much more than struc-
tures and explicit planning models. The culture and style of the organizations are
a much more important aspect for our purpose.
For example, McKinsey, the world-famous consultancy known as ‘The Firm’, is
seen by some as the supreme example of networking. Access to key decision mak-
ers via interlocking networks of contacts and shared experiences is a pivotal

resource. As an example of the value of discipline, reputation and access, it is a
leading light. But still we must explore the point about discipline. What has been
one of the oft-quoted models of change in the last 10 or 15 years – the McKinsey
7S Model, which comprises systems, structure, style, strategy, skills, staff and
superordinate goals – reflects the influence of the company. The point is that
McKinsey achieves much through its access but can do so only through the value
it attaches to the intellectual power of its people and that built into the consult-
ing models it deploys. Not least therefore, ‘The Firm’ projects an image of success,
access, being ‘in the know’ and internationalism, but mainly value through the
intellectual reputation it has acquired. The crucial point is to note the symbiotic
nature of its approach. Access is vital and remains a necessary but not sufficient
resource for success. McKinsey stays close to its market by networking with key
decision makers through the way people move between it and key corporates
globally. But its reputation flows from providing value through intellectual

341