Page 93 - Managing Change in Organizations

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Chapter 4 ■ Theories of change: traditional models

the business units as peer groups seek to ensure that each carries its share of the growth in
revenues, margins and so on needed to deliver longer-term strategic goals. Peer groups pro-
vide a mechanism for deciding resource allocation and for knowledge sharing.
Pivotal to this was the notion that high-performing business units in a peer group must
assist under-performing units to improve. Indeed the expectation is that the top three per-
formers will help the bottom three. The performance of the top three in doing so is meas-
ured each year and this is built into the bonus structure. Overall therefore these changes
are backed up with both economic incentives and a high degree of transparency.
This is extended via a ‘peer assist’ process within which executives work to help partic-
ular business units work on issues or projects of various sorts. This often spanned peer
group boundaries and regularly involved many executives committing significant amounts
of time to the process. The belief is that everyone gains. The business unit draws on the
experience throughout the organization. Those involved see it as a development oppor-
tunity. These peer processes emphasize horizontal/collaborative working and dialogue,
building the capacity for learning and greater creativity.
In 2001 continued growth required further reorganization with a consolidation of
business units, reducing the total number. As has been argued elsewhere, decentraliza-
tion is a matter of balance. So is knowledge sharing. The BP approach has been to create
purposeful conversations across the organization. But business units must also sustain
‘business as usual’ so balances must be struck over time. Of course, peer group members
have a shared interest in seeing that these balances are maintained. Nevertheless one is
looking at a continually evolving picture.
The peer processes help create value through the transfer of best practice, via peer
advice, shared expertise and by creating a firmer basis for major business develop-
ment/strategic moves. This is supported by organizational arrangements which promote
but also discipline peer group behaviour. These include the use of incentives and the sub-
stantially enhanced economic transparency evolving through the peer group process. In
addition BP’s ongoing investment in the development of people creates an environment
in which development is a legitimated activity for executives. This is balanced by making
clear at all levels that disciplines are also needed.
In turn, the value of these processes has been reinforced by the definition of ‘human
portals’. Often not business unit leaders but rather experienced people who have a mul-
tiplicity of contacts throughout BP, they are people who have been identified as those

to whom you can go if you seek expertise. Their role is to ‘connect’ you to that expert-
ise wherever it may exist within BP. Again we have long known that these people are
potentially an invaluable resource. Indeed in some ways when we distinguish between
formal and informal organization this is part of the distinction being made. The point
here is that the explicit organizational recognition gives legitimacy to the role, and
therefore to these people. This has been called applying a ‘behavioural net’ onto a
decentralized structure. The organization creates the conditions for cross-unit learning
and collaboration without undermining the flexibility and accountability for perform-
ance at business unit level. At the same time the peer group process drives forward per-
formance in what after all is a highly ‘connected’ organization. These are complex and
evolving balances which need continually to be worked on and with.
These organizational changes seek to balance the obvious advantages of scale (e.g.
by pooling purchasing volumes via centralized purchasing) with the benefits of decen-
tralized and horizontal networking, in which contact between people, above all, pro-
vides for learning.
Sources: Rogan, 2002; Hansen and van Oetinger, 2001
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