Causes of change

Organisations and their changing environments- Fleming and Sum (?)

The forces that operate to bring about change in organisation can be thought of as
winds which are many and varied- from small summer breezes that merely disturb a few
paper to might howling gales which cause devastation to structures and operations causing
consequent reorientation of purpose and rebuilding. Sometimes however, the winds die down
to give periods of relative calm, periods of relative organisational stability.

Environmental triggers of change

Nadler and Tushman (1988) summarised an organisation’s environment as:

‘All factors, including institutions, groups, individuals, events and so on, that are outside the
organisation being analysed, but have a potential impact on that organisation.

The impact of PEST

Some analysts have found it useful to group different environmental factors into categories
under the mnemonics PEST (Johnson and Scholes, 1999) and STEP (Goodman, 1995), both of
which refer to political, economic, technological and socio-cultural factors that influence
organisations, their strategies, structures and means of operating, including human resource
practises.

Triggers for change from the technological environment

 Information technology
 The Internet
 New production processes (machines instead of humans, or working side by side)
 Computerisation of processes
 Changes in transport technology

Triggers for change from the political environment

 Government legislation
 Government ideology
 International law
 Universal rights
 Wars
 Local regulations
 Taxation
 Trade union activities

Triggers for change from the economic environment

 Competitors
 Suppliers
 Currency exchange rates
 Employment rates
  Wage rates
 Government economic policies
 Other countries’ economic policies
 Lending policies of financial institutions
 Change from public to private ownership.

Triggers for change from the socio-cultural environment

 Demographic trends (customers and employees)

 Lifestyle changes
 Skills availability
 Attitudes to work and employment
 Attitudes to minority groups
 Gender issues
 Willingness and ability to move
 Concern for the environment
 Business ethics

Internal triggers for change

 An organisation becoming unionised or de-unionised

 A new chief executive or other senior managers
 A revision of administrative structures
 The redesign of a group of jobs
 The redesign of a factory or office layout
 The purchase of new IT equipment
 A new marketing strategy
 A cut in overtime working
 Staff redundancies
 Strengthening of specific departments such as research and development

A quick glance through the internal trigger list will show that almost all of them can be
conceptualised as changes in response to influences external to the organisation. It is
therefore, difficult in reality to separate completely internal from external triggers for change.

Organisational responses to change

Sadler (1989) said there are at least 3 types of environment, which make up the total
operating environment:

1. Temporal environment- Historical developments bringing in changes over time. These

range from those activities that are mainly industry focused to those which rely more
on knowledge and brainpower- Handy (1994) calls this ‘focused intelligence’, the
ability to acquire and apply knowledge and know-how. This can affect the firm in two
ways: i) more generally, through the cycles of industry-based innovation, which moves
firms through major series of developments. ii) More specifically, through the life cycle
of the organisation itself- its particular history built up from the founder days through
periods of expansion and decline

2. External environment- this involves the usage of PEST

 3. Internal environment- consists of those organisational changes that are the first-line
responses to change in the external and temporal environments.
Environmental Turbulence

Ansoff and McDonnell (1990) propose 5 levels of environmental turbulence:

Level 1: Predictable- a repetitive environment characterised by stability of markets; where the

challenges repeat themselves; change is slower than the organisation’s ability to respond; the
future is expected to be the same as the past.

Level 2: Forecastable by extrapolation- complexity increases but managers can still extrapolate
from the past and forecast the future with confidence.

Level 3: Predictable threats and opportunities- complexity increases further when the
organisation’s ability to respond becomes more problematic; however, the future can still be
predicted with some degree of confidence.

Level 4: Partially Predictable Opportunities- turbulence increases with the addition of global
and socio-political changes. The future is only partly predictable.

Level 5: Unpredictable Surprises- turbulence increases further with unexpected events and
situations occurring more quickly than the organisation can respond.

These levels can be compared to three different kinds of change situation proposed by Stacey
(1996) namely: closed change, contained change and open-ended change.

Closed change- looking back at the history if an organisation there are some sequences of
events that we can clearly recount in a manner commanding the widespread agreement of the
members involved. Able to see what, why happened and the what the consequences were.

Contained change- here we are only able to say what probably happened, why it probably
happened and what its probable consequences were. The impact of such a sequence of events
upon the future course of the business has similarly to be qualified by probability statements.

Open-ended change- there are yet other sequences of events and actions arising from the past
and continuing to impact on the future where explanations do not command anything like
widespread acceptance by those involved.

Ansoff and McDonnell, and Stacey’s models can be related, also, to Stacey’s (1996) concepts of
‘close to certainty’ and ‘far form certainty’:

Closed and contained stages and Levels 1-3 refer to close to certainty.
As the degree of turbulence moves form level 4 to 5 and open-ended change, that can be said
to be far from certainty.

Context and action in the transformation of the firm- Andrew Pettigrew

Leadership and transformation of the firm

Approaches to leadership should be less short-range and atomistic- less reductionist. Leaders
should be studied in natural settings using observational and other quantifiable
measurements. Leadership should be examined thought the holistic study of actual behaviour
rather than breaking the activities of leaders and the response of followers into categories of
independent and dependent variables. (McCall and Lombardo, 1978)

To Burns (1978), leadership and followership are inextricably linked. Transactional

leadership is an exchange relationship between leader and follower whereby compliance is
agreed, explicitly or implicitly, through reciprocal exchange. Transformational leadership is
more uplifting process with higher order goals. Here the leader looks for potential motives in
followers, seeks to satisfy higher order needs so that through a process of mutual stimulation,
they ‘unite in the pursuit of higher goals, the realisation of which is tested by achievement of
significant change. Thus to Burns leadership is mobilisation process by persons with motives
and values, various ‘resources in a context of competition and conflict, in order to realise goals
independently or mutually held by leaders and followers (1978).

While managers may be fixated by a concern with ‘moving organisations along historical
tracks (Tichy and Ulrich, 1984), the transformational leader is ‘causative… can create the
social architecture that supports them… can move followers to higher degrees of
consciousness, such as liberty, freedom, justice, and self-actualisation (Bennis and Nanus,
1985). O’Connor (1972) is most often cited as evidence for the inability of leaders to effect
performance.

‘only executive leadership is able to initiate and implement strategic reorientations (Tushman
and Romanelli, 1985). The character of leadership task changes from convergent to
reorientation periods. ‘During convergent periods executive leadership emphasises symbolic
activities and incremental change, while during re-creations executive leadership engages in
major substantive as well as symbolic activities’ (Tushman and Romanelli, 1985). Here
leadership is context sensitive and time sensitive.

Context, Process and Organisational Changing

A suggestion to respond to the weaknesses in the literature on leadership and on change is to

encourage a form of research which is contextualist and processual in character (Pettigrew,
1985). A contextual analysis of a process such as leadership and change draws on phenomena
at vertical and horizontal levels of analysis and the interconnections between those levels
through time. The vertical level refers to the interdependencies between higher or lower
levels of analysis upon phenomena to be explained at some further level (i.e. the impact of a
changing socioeconomic context on features of intraorganisational conext and interest-group
behaviour). The horizontal level refers to the sequential interconnectedness among
phenomena in historical, present, and future time. An approach that offer both multilevel or
vertical analysis and processual, or horizontal, analysis is said to be contextualist in character.
Contextual analysis would have the following characteristics:

1) It would require a clearly delineated but theoretically and empirically connectable set
of levels of analysis. Within each level of analysis, there would be a specified set of
cross-sectional categories.
2) It would require a clear description or the process/processes under examination. Basic
to the notion of a processual analysis is that an organisation or any other social system
may profitably be explored as a continuing system, with a past, present and future.
Sound theory must, therefore, take into account the history and future of a system and
relate them to the present. The process itself is seen as continuous, interdependent
 sequence of actions and events that is being used to explain the origins, continuance,
and outcome of some phenomenon.
3) The processual analysis requires a motor, or theory or theories, to drive the process,
part of which will require the specification of the model of human beings underlying
the research. Strong emphasis is given both to people’s capacity and desire to adjust
social conditions to meet their ends and to the part played by power relationships in
the emergence and ongoing development of the processes being examined.
4) Crucial, however, is the way that the contextual variables in the vertical analysis are
linked to the processes under observation in the horizontal analysis. It is not sufficient
to treat context either just as a descriptive background or as eclectic list of antecedents
that somehow shape the process. Structure or context should not be seen as just
constraining process. This approach recognises that processes both are constrained by
structures and shape structures, either in the direction of preserving them or in
alerting them. Here an attempt is being made to combine the forms of description and
analysis, first of all, by conceptualising structure and context not just as a barrier to
action, but as essentially involved in it production ( Giddens, 1979), and secondly, by
demonstrating how aspects of structure and context are mobilised or activated by
actors and groups as they seek to obtain outcomes important to them.

An attempt will be made to formulate models of higher-level factors and processes, lower-
level factors and processes, and the manner in which they interact. It is recognised that each
level has its own properties, processes and relationships, and that while phenomena at on
level are not reducible to or cannot be inferred form those at another level, a key to the
analysis is tracking the interactions between levels through time.

The starting point for this analysis of strategic change is the notion that formulating the
content of any new strategy inevitably entails managing its context and process. Outer context
refers to the social, political, economic and competitive environment in which the firm
operates. Inner context refers to the structure, corporate culture, and political context within
the firm though which ideas for change have to proceed. Content refers to the particular areas
of transformation under examination. Thus the firm may be seeking to change technology,
manpower, products, geographical positioning, or indeed corporate culture. The process of
change refers to the actions, reactions and interactions from the various interested parties as
they seek to move the firm from its present to its future state.
Thus broadly speaking, the ‘what’ of change is encapsulated under the label content;
much of the ‘why’ of change is derived from an analysis of inner and outer context; and the ‘how’
of change can be understood from an analysis process

In the manner of Bower (1970), Mintzberg (1978) and Burgelman (1983) the transformation
of the firm is seen as an iterative, multilevel process, with outcomes emerging not merely as a
product of rational or boundedly rational debates, but also shaped by the interests and
commitments of individuals and groups, the forces of bureaucratic momentum, gross changes
in the environment, and the manipulation of the structural context around decisions.

Explanations of change have to be able to deal with continuity and change, actions and
structures, endogenous and exogenous factors, as well as the role of chance and surprise. A
view of process combining political and cultural elements evidently has real power in
explaining continuity and change. The recognition that culture can shape and not merely
reflect organisational power relationships directs attention both to the ground rules, which
structure the character of political processes in the firm, and the assumptions and interests
which powerful groups shield and lesser groups may only with fortitude challenge.
The acts and processes associated with politics as the management of meaning represent
conceptually the overlap between a concern with the political and cultural analyses of
organisations. A central concept linking political and cultural analyses essential to
understanding of continuity and change is legitimacy. If one sees strategic change processes
at least partially as a contest about ideas and rationalities between individuals and groups,
then the mechanism used to legitimate and delegitimate particular ideas or broader
ideologies are obviously critical in such an analysis.

Building on the work of Lukes (1974) and Pfeffer (1981), Hardy (1985) has recently argues
that a concern with power and control as explanations of strategic choice and change
processes would in effect correspond to two uses of power. Power to defeat competition in a
choice or change process, and power used to prevent competition in a choice or change
process. In both of these processes there would be an explanatory role for unobstrusive
systems of power derived from the generation and manipulation of symbols, languages,
ideology and belief- from culture creation; and from the more public face of power expressed
through the possession, control, and tactical use of overt sources of power such as position,
rewards or sanction, or expertise.

There are two further points to derive from the above way of thinking about process. The first
s that structures, cultures and strategies are not just being treated here as neutral, functional
constructs connectable to some system need such as efficiency or adaptability; those
constructs are viewed as capable of serving to protect the interests of dominant groups. Thus
the biases existing in structures and cultures can protect dominant groups by reducing the
chances of challenge, and features of inner and outer context can be mobilised by dominant or
aspiring groups to legitimate the existing order, or indeed to help create a new order. As
Normann (1977) said ‘the only way to bring about lasting change and to foster ability to deal
with new situations is by influencing the conditions that determine the interpretation of
situations and the regulation of ideas.’

This recognition that transformation in the firm may involve challenge for the dominating
ideology. Cultures, systems of meaning and power relationships in the organisation, makes it
clear why and how the process of sensing, justifying, creating, and stabilising major change
can be so tortuous and long.