Page 46 - Managing Change in Organizations

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Leadership and ‘excellence’
■ Financial realism: when I worked as an engineering designer I often made
design choices on technical but not commercial or economic grounds. The
cost implications of decisions were not considered during the design process.
In an increasingly competitive world this approach has become recognized as
outmoded. Finance is a crucial input to any organization – not the only one,
or even the most important, but one which must be confronted in decision
making. Effective or ‘excellent’ organizations appear to be characterized by
managers taking financial issues properly into account alongside other issues
such as technical or marketing factors.

If these are some of the characteristics of ‘excellent’ organizations, how can man-
agers encourage them to emerge? To understand this it is necessary to understand
how managers work.

Strategy and structure
Many argue that there is a definite link between strategy and structure. Chandler’s
(1962) classic study argued that to be successful organizational structure had to be
consistent with strategy. It is certainly widely accepted that a number of factors
will have an important impact on success, including the following:
1 The degree of uncertainty in the environment within which the organization
operates.
2 The extent of diversity in products and markets, with larger firms in many mar-
kets often operating a divisional structure, based on products, or geographic
regions, or even combinations of both.
3 Size – larger firms tend to adopt professional management approaches, more
formalized procedures, etc. (but see below).
4 Technology – in the broad sense of both the physical infrastructure (machines,
computers, factories, offices, etc.) and the ‘software’ (e.g. the organization of
work, product knowledge, information flows, work flows, etc.).
5 Culture, in that there seem to be national differences in appropriate forms of

work organization and management style; in some countries teamwork seems
to be more strongly emphasized, in others managers rely less (or more) on for-
mal authority. Quite a lot of research has been undertaken in this area since
the landmark study by Hofstede (1968). Some argue that you can identify
regional influences (e.g. ‘European managers’, ‘Asia–Pacific’ managers), while
others suggest that either diversity within regions – even within countries – is
too great for this to be meaningful, while others suggest that the advent of
global corporations, information technology, integrated management training
and development is creating some convergence. Be that as it may there are dif-
ferences which, at the least, must be understood.
There are many research studies of the above (see below). A classic study on the
growth of organizations (Greiner, 1972) suggests that they experience periods of
evolution and revolution. Both size and age (of organizations) are important vari-
ables: the former can lead to problems of coordination and control, the latter to
inflexibility as attitudes become fixed over time. The main message here is that as

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