Page 69 - Managing Change in Organizations

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Chapter 3 ■ The transformation perspective
has not changed in the world’s leading economies over the last 20 years, although
the level fluctuates, inevitably. You can counter this by arguing the view that the
big change is that for the first time it is middle-class employees experiencing job
insecurity. They are more vocal and we are experiencing the consequences.
Perhaps also the shift in organizational mind-set referred to above is relevant.
Where the focus of activity is the horizontal value chain it may be that people
who once understood to whom they report must now report to more than one
individual and meet multiple, and sometimes even conflicting (certainly ambigu-
ous), performance objectives.
One formulation of how to achieve economic success in the midst of these ambi-
guities relates to the concept of ‘trust’ or social capital. The most influential recent
work is that of Fukuyama (1995). For him one solution to the problem of scale lies
in the emergence of networks such as businesses held together by family ties, cross-
ownership, long experience of joint work and so on. In particular, he points to the
advantages of establishing long-term relationships between members of a network.
All of this is now known to us as supply chain management. He argues that net-
works based on reciprocal obligation enable scale to be achieved without the prob-
lems of size and alienation referred to above. These networks appear to have
emerged in societies with cultures which encourage high levels of trust (e.g. Japan,
South Korea, Germany, northern Italy). In ‘low-trust’ societies stable networks can
be created via cross-ownership but will certainly be more difficult to sustain.
Increasingly, major corporates begin to work on the briefing of ‘social capital’
via value-added strategies. Here the organization is defined as a horizontal value
stream supported by other activities (e.g. marketing development, senior manage-
ment, finance). Each part of the organization has performance parameters defined
in terms of value to its customers. Organizations use competence models and
assessment, 360° feedback techniques and the balanced scorecard as a means of
putting this into effect. The objective is to identify what each activity contributes
by way of value to its customers, measure that and feed that information openly
to the people involved in the activity, their customers and senior management.
Part of the role of management is to help each activity to drive its performance
forward in terms of these parameters.

A longer-term task of senior management is to identify and access the capa-
bilities needed for the future. There are few organizations which have developed
a coherent system of the type outlined here but there are many examples (in
telecommunications, financial services, healthcare, manufacturing and utilities)
of organizations working on such approaches.
The implications of the above can be sketched out graphically by looking at
how we depict organizations. Traditionally, we depict organizations as structures
of hierarchical authority whether we describe an organization of structure which
is either functional or divisional. Thus we typically construct the pyramid as
shown in Figure 3.3.
Rarely were organizations as simple as that. Rarely would the above describe
behaviour within organizations, which is why sociologists created the distinction
between ‘formal’ and ‘informal’ organization, where the latter describes how peo-
ple work with, through and around the formal organization in pursuit of various
objectives, their own as well as the organization’s.

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