Page 62 - Managing Change in Organizations

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Changing organizations
The opening
Early in life cycle, low competition
Depends on leaders not systems

Maturity: steady state
Growth and complexity. Management professionalized and developed
The firm survives because of reputation and scale. Good people leave in search of better
opportunities
Decline
Silo mentality plus divisional and function US corporate agendas creates tension and problems
Figure 3.2 Syndrome of ineffective leadership and change management (after
Kotter, 1988)
functional or departmental orientation, centralization and autocratic manage-
ment styles, creates a powerful tendency to limit risk taking. On the other,
managers moving rapidly through careers and not having to face up to their
mistakes do not learn the interpersonal skills needed to do so. They find facing
up to performance issues difficult. Therefore, when forced to do so by those
same short-term pressures, they often do so inadequately and in a volatile, even
primitive, fashion. This further reduces risk taking, over time creating an
organization within which the ‘fear of failure’ is very high indeed. There is a
powerful ‘vicious circle’ in place continually reinforcing any tendency to
underperform.
Kotter (1988) identifies a number of the ‘characteristics needed to provide effec-
tive leadership’, overcoming the problems identified in the syndrome outlined
above. To be effective, leaders need a range of knowledge of industry, business func-
tions and the firm. Also needed are a broad range of contacts and good working
relationships in the firm and the industry. Linked to this will be a good track record
in a relatively broad set of activities. Kotter also refers to ‘keen minds’ (whatever
that means), strong interpersonal skills, high integrity, seeing value in people and
a strong desire to lead.
All of this points us towards the new strategy paradigm proposed by Hamel

and Prahalad (1994). For them, competing for the future means lifting our sights.
Re-engineering internal processes is not enough, we must regenerate strategies.
Transforming the organization is essential but the winners (such as CNN) trans-
form their industry. Having strategic plans focuses attention internally; what is
needed is a new strategic architecture. The essential point is that it may be nec-
essary to re-engineer our processes to reduce cost and improve service but that is
insufficient to gain competitive advantage because our competitors can do the
same. To be successful we must create new strategies aimed at transforming our
industry whether it is food, medicine, education, entertainment or whatever. In
the modern world renewal demands that we do more than identify how to do
more, better and for less. We must also regenerate what we do.
Kay (1993) attempts to identify the origins of corporate success from distinctive
structures of relationships between the corporation and employees, customers and
suppliers. Continuity and stability in these relationships allow for a flexible and
cooperative response to change. At the core of his analysis lies the concept of

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