Page 72 - Managing Change in Organizations

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The value-added organization
and homeworking are each variants which attract continuing attention. For our
purposes there are two points to note:
1 Increasingly we see two approaches to change in use – a planned approach to
change and a market-based approach. In the former we decide the direction,
objectives, stages, milestones, change methods and so on. In the latter we seek
to motivate people in pursuit of a particular direction, desired objectives, pre-
ferred patterns of behaviour, but we are less concerned about milestones etc.
This is a topic to which we will return, but the basic argument is that too much
attention to targets and milestones creates expectations which can lead to
fewer results than were achievable. In the latter we establish market mecha-
nisms as a means of motivating changed behaviour. So long as we also provide
adequate resources, information and support this often leads to dramatic
changes in behaviour.
2 It appears that innovations such as the virtual organization, networks,
alliances or homeworking create the potential for isolation. Thus cohesion
becomes a crucial issue. New forms or sources of cohesion are needed if the tra-
ditional sources of department and structure are no longer present. More gen-
erally, economists now argue that social capital is essential to success. Social
capital can be seen as the extent of social cohesion and is firmly linked to a
sense of social solidarity, shared values and common commitment. If these are
high then we have a high level of social capital. In an increasingly fragmented
organizational world, social capital becomes a crucial determinant of success.
Taking this second point further, the defining characteristics of the virtual
organization are emerging as follows:
■ They have a shared vision and goal and/or a common protocol of cooperation.
■ They cluster activities around their core competencies.
■ They work jointly in teams of core-competence groups to implement their
activities throughout the value chain.
■ They process and distribute information in real time throughout the value chain.
■ They tend to delegate from the bottom up wherever economies of scale can be

achieved or when new conditions arise.
These characteristics require and/or facilitate trust relations. This is social capital.
It is interesting to note that these characteristics are also generally deemed valu-
able in other circumstances: mergers demand them and lean production requires
them. In reality the changed focus of those concerned with organization from
vertical concerns over control and coordination to a horizontal concern for value
added creates the circumstances in which trust is essential to success. Fukuyama
(1995) puts it thus:
it is possible to argue that in the future the optimal form of industrial organi-
sation will be neither small companies nor large ones but network structures
that share the advantages of scale economies while avoiding the overhead and
(other) costs of large, centralised organisations. If this will in fact be the case,
then societies with a high degree of social trust will have a natural advantage.

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