Page 92 - Managing Change in Organizations

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Emergent approaches to change
means of inducing change via competitive/collaborative behaviour in pursuit of
economic goals. The Higgs and Rowland change leadership competence model
has been tested initially through research at Shell.

CASE
STUDY Learning your way to improved performance:
British Petroleum

BP Amoco is one of the world’s largest and highest profile companies. This organization is
global in its operations and impact, highly profitable and self-evidently a leading business
in the energy sector. The company has gone through a series of changes since the early
1990s during the incumbency of three successive CEOs including Lord Browne, who has
been in post since 1996 having worked with BP since leaving university (Browne is to be
replaced by Tony Hayward as CEO in the summer 2007). Structural changes focused on
cutting out layers of management, clarifying financial accountability at business unit level
and improving performance in the 1990s were seen, in retrospect, as necessary to build a
platform for a transformation of performance. Most tellingly under the then CEO, David
Simon, capital expenditure was reduced leading to a need to be much more disciplined
about focusing exploration spending (for example) on fewer, and therefore the better,
prospects. There was a clear need for scale and for global reach. Thus there began a series
of mergers and acquisitions positioning the emerging group to enable it to deliver
improved returns and to expand capital spending, having already first worked on enhanc-
ing the effectiveness of capital spending.
All of these moves created a large and fragmented company by 2000. In fact from
1995 onwards the company sought to apply four organizational principles:
1 People work better in smaller units.
2 But larger organizations create proprietary knowledge and it makes sense to share
that knowledge quickly.
3 Peer group dialogue and challenge around performance was very different to supe-
rior–subordinate discussion of performance and this difference could and should be
leveraged.
4 Reputation is a crucial resource both externally and internally.

Applying these principles has lead the organization to recognize a fifth principle
which it has sought to exploit to the fullest possible extent:
5 While formal or explicit knowledge is important, it is at least as important to share
‘tacit’ knowledge.
Tacit knowledge (see below) is neither effectively captured nor well shared through
knowledge management systems. You need to bring people together.
This fifth principle has long been known. Indeed the original idea of the university and
of scholarship which emphasized tutors and students working either one-to-one or in small
groups was based on this idea. In any event BP sought to build sharing via a structured
process, creating what Argyris calls ‘productive reasoning’ and what has also been called
‘purposeful conversations’ by establishing peer groups. The business units were organized
into 15 ‘peer groups’, each comprising units within a particular business stream. Business
unit targets are set within a performance contract. These targets are set through a process
of conversations within the business units, within the peer group and with top manage-
ment. Within this process the peer group represents a powerful source of challenge across ➔

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