Page 38 - Managing Change in Organizations

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The dilemmas of organization
Global versus local

This is a variant of the centralization versus decentralization dilemma but in a sense
more important because of the scale factor. Once a company has begun to operate
internationally establishing manufacturing, marketing and/or distribution/after-
sales support operations around the world, it faces this dilemma of how to balance
the need to motivate managers to operate successfully within a given local market
with its particular demands and characteristics against the demand for global devel-
opment and coherence. Thus we may need to develop and leverage a particular
technology across the globe, in the way that drug companies such as Novartis are
so skilled at doing. Additionally, concern to develop an integrated capability, coher-
ence in culture and an integrated logistics chain can create pressures on local needs.

Efficiency versus effectiveness

The third dilemma is that between efficiency and effectiveness. This will be
examined more thoroughly in the next chapter but for the moment suffice it to
say that efficiency may be defined as achieving stated goals (say the manufacture,
sale and distribution of a given product or service) within given resource con-
straints. Effectiveness includes efficiency and adaptability to future circum-
stances. The effective organization balances immediate efficiency with the ability
to deploy new products and services for the future. The dilemma emerges in all
sorts of practical ways. When cuts in budgets are needed it may seem relatively
easy to cut training and research and development (R&D). Both may incur cost
but not generate income and seem, therefore, to be more likely candidates for
cuts than are operational activities. Yet both might be important to the future of
the organization.
It should, however, be noted that both training and R&D are services which
can be sold externally, thus generating income. Thus the dilemma is not between
today’s figures and activities which focus on the future but create cost in today’s
‘bottom line’; rather, it is between adopting an internal or an external focus to
activities.
The efficient organization focuses on internal efficiency and control. The effective

organization constantly strives to ensure that all its activities pass externally imposed
criteria. These may be the ability to generate income by sales, or income by grant-aid
(e.g. by obtaining research contracts), or by other external reference points. To be
effective an organization must adapt to changing external circumstances.
There are various practical ways of overcoming this dilemma between efficiency
and effectiveness. They all depend on achieving a better understanding of the
necessity for change and adaptability. This may be achieved in a variety of ways:
■ Job rotation can be utilized to give people a broader perspective of the organi-
zation’s work.
■ Following the first point, selection and training of people can emphasize a
broader background.
■ Intensive use may be made of all available methods of communication in
order to create a better degree of shared understanding of the organization’s
tasks, resources, opportunities, etc.

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