Page 66 - Managing Change in Organizations

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The value-added organization
for ‘management and planning’. The out-turn had been 30 days and the budget
for the current year was 32 days. In our view 25 days (which represented 10 per
cent of the internal audit budget) was high. No explanation was given for the 30
days out-turn nor to justify a budget of 32 days this year. We raised a series of ques-
tions. What activities were included in ‘management and planning’? What was
the value of those days? We also noted that overruns on various audit projects
undertaken by the firm during the last year had been due to problems of getting
information – was this a sign of good planning? Or of the need for more planning?
The director of the internal audit firm was defensive. He referred to industry
norms of up to 20 per cent for planning audit work. We acknowledged that but
pointed out that the audit needed for our organization was relatively straightfor-
ward. Eventually he said, ‘Well I had hoped that we could develop a cooperative
approach and engage in a free and frank discussion’. To which our reply was:
‘That’s what we are doing!’ There is little doubt in my mind that the criticism had
placed him on the defensive, automatically. While he recognized that he sought
an open relationship he felt drawn to defend the number of days ascribed to ‘man-
agement and planning’. More importantly he felt constrained from explaining
that the reason for the high number of actual days was that there had been so
many problems during the previous year (in which the organization, and there-
fore the finance function, had been founded) that he and other senior colleagues
had been forced to spend time on site problem solving in order to get things done.
To say so would be critical of the finance director – or at least apparently so.
Argyris (1990) argues that people can be taught to reason in ways which reduce
and overcome organizational defences. For example:
they will discover that the kind of reasoning necessary to reduce and over-
come organizational defenses is the same kind of ‘tough reasoning’ that
underlies the effective use of ideas in strategy, finance, marketing, manufac-
turing and other management disciplines . . . it depends on collecting valid
data, analyzing it carefully, and constantly testing inferences drawn from the
data . . . Good strategists make sure that their conclusions can withstand all
kinds of critical questioning.

At its basics, then, ‘productive reasoning’.

The value-added organization

I recall completing the review of an MBA dissertation draft. The author worked
for a global telecommunications business. His company is concerned that they
are not achieving the rate of change required of world-class companies in that
sector. I was struck by part of his diagnosis:
Current change methodologies are employed within functional silos and the
informal way in which strategy is cascaded through various differentiated
groups and departments dilutes the value of the strategy . . . [which] should be
focused on understanding how the business processes deliver overall enter-
prise value . . . needs to develop a process for implementing strategic improve-
ment ideas in those value streams.

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