Page 50 - Managing Change in Organizations

CarnCh02v3.qxd 3/30/07 4:09 PM Page 33

Leadership and ‘excellence’
■ Integrative processes are needed if diverse interests are to be balanced – that is,
we must work at maintaining interfaces, networks, etc.
■ Effective information flows throughout the business are a vital source of added
value.
■ Flexibility in structure and process and the capability of including external
partners are important.
■ There needs to be stability and consistency of purpose – a leadership task.

So once again the demands arising out of internationalization lead to the need
to create and operate networks (see Bartlett and Ghoshal (1989) for an analysis of
NV Philips as an international network).
It is important to realize that the issues we have referred to are not simply per-
sonal issues for which the solutions lie within the ‘people skills’ area; they are
business issues demanding business skills – indeed the management skills required
combine business and personal skills. Gould and Campbell (1987) articulate this
idea through identifying three corporate styles which you can observe in large,
diversified groups, as follows:
1 Strategic planning style: strong central management involvement in strategy
development through an extensive planning review process and powerful ini-
tiatives to secure development of the business arising from the centre. Focus
on creating shared vision leads to flexibility in performance targets, with per-
formance being viewed in the context of longer-term objectives.
2 Strategic control: emphasis on planning at the business unit level, with the cen-
tre concerned primarily with the exercise of tight controls.
3 Financial control: the annual budget becomes the key control mechanism, focusing
attention on short-term targets.

For Gould and Campbell, where the prime orientation of senior management is
characterized by the belief in short-term results, the financial control style will
emerge. Where the orientation is on longer-term competitive advantage seen as
arising out of more than only financial success which can be developed, in whole
or in part, from the centre, then one of the other two styles will predominate. In

the former it is not necessarily the case that senior management do not accept
that competitive advantage emerges out of factors other than financial perform-
ance, but rather they disbelieve the notion that centrally driven initiatives are the
best source of competitive advantage.
They then link these styles to a number of factors including the shape, size and
diversity of the product/service portfolio, stability in the environment, the per-
sonality of the chief executive, the financial condition of the business and so on.
From all of this we can begin to see that over the last 20 or 30 years changes
within the global economy have created new management problems demanding
solutions both more complex and more demanding of management skills than
traditional hierarchies. We now turn to what managers do.
ABB (Asea Brown Boveri), known as the European company the giants of Asia
feared, is an interesting example of how these dilemmas of organization are faced,
e.g. the global–local dilemma in particular. As a company it operates in 60 or more
countries through over 1300 separate legal entities. It operates in a range of electrical

33