Page 68 - Managing Change in Organizations

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The value-added organization
this century – that of acquisitions and mergers. It is not our purpose here to dis-
cuss this topic. Here we merely point out that such a change strategy involves
rethinking the boundary of the organizations as pieces (companies, divisions,
etc.) are added or subtracted.
This tendency to rethink the boundary of the organization has accelerated as
part of the changing mind-set we refer to above – and indeed may have caused
that change in the first place. Throughout most of the last century the large, inte-
grated and centralized organization was excellent at coordination and control –
and may have been good at settling conflict (although personally I doubt it,
though it may have been good at reducing the level of manifest conflict).
Conversely, in order to seek higher levels of innovation, organizations first decen-
tralized via the multi-divisional form. But faced with the continued problems and
the inability to develop every new technology/capability internally, organizations
increasingly decentralized through joint ventures, alliances and ultimately ‘the
virtual company’.
Here, however, we note something which is becoming a standard of manage-
ment practice when the focus is on the supply chain. First, a company needs to
build strong ties with its suppliers in order to secure its ability to pursue innova-
tion, improvement and enhanced value. Second, a company needs to develop
critical technologies internally if it is to secure its position on the value chain.
Here we see the argument that strategic networks can be very effective as a means
of acquiring particular capabilities and of creating high-powered incentives
towards improvement, change and enhanced value. Our concern here is not to
evaluate the argument but merely to emphasize the new style of thinking
involved in even raising the question.
Most importantly for our present purpose, we have seen a tendency to replace
planned, organizational change with market-induced change. Sometimes the
market mechanisms are internal, and there is a long history of the development
of such mechanisms, e.g. performance-related pay schemes, the emergence of
strategic business units, the development of competence-based models for per-
formance management, share option schemes and so on. Increasingly we see the
tendency to use market mechanisms to secure change. Strategic alliances, net-

works, outsourcing, deregulation are all attempts to introduce or encourage market-
based incentives. The idea of purchasing being separated from provision has
influenced companies and governments. In the UK and elsewhere in the world,
government departments have been converted to free-standing agencies. The UK
health service has been reorganized into large-scale purchasing authorities and
self-governing trusts providing hospital and other services alongside general
practitioners providing primary care. Similarly, a global business such as Glaxo
has reconfigured itself from having regional sales operatives supplied by regional
factories to a situation in which the sales business is free to source from the best
available supplier. Here the certainties of allocated budgets are replaced by the
pressures, disciplines and incentives of competition.
But is this sufficient? At the same time we all of us point to our present anxi-
eties and uncertainties. Some argue that this is a consequence of downsizing and
a consequential higher risk of unemployment. Others point to the growth in part-
time employment. Critics of this kind of thinking point out that unemployment

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