Organization Theory: Strategy Implementation Process

Organization Theory: Strategy Implementation Process Steven E. Phelan July, 2006 STRATEGY EXECUTION: Power, Culture, People

Overview • Culture • Hrebiniak, Chapter 8 • Morgan, Chapter 5 • Charan, “Culture change at Home Depot” • Case: “Culture change at Seagram” • Power • Hrebiniak, Chapter 9 • Morgan, Chapter 6 • Kramer “The great intimidators” • Case: “Donna Dubinsky” • People • Pfeffer “Competitive advantage through people”

Culture

Organizations as Cultures • Culture: “the way we do things around here” • National cultures • Regional cultures • Organizational cultures • Departmental cultures • Culture… • Is not homogenous • Affects performance • Is affected by peformance

Cultural metaphors • How is culture like: • A language, an iceberg, an onion, an umbrella, or sticky glue? • What else could be a metaphor for culture?

Exercise: Corporate cultures • Take some time to share the following answers to these questions about your organization with a partner: • What kinds of beliefs and values dominate your organization (officially…unofficially) • What are the main norms (do’s and don’ts) • What are the dominant stories and rituals? • What are the favorite topics of informal conversations? • Think of three influential people in the organization. How do they symbolize the character of the organization? • Are there subcultures? Are they in conflict or harmony?

Debrief • What struck you as abnormal or strange about your partner’s answers? Why? • What management challenges do you think your partner’s organization might present? How hard would it be to change the culture? • What are the implications for strategy implementation?

Some key questions Where does culture come from? How is it sustained? How do we create or change a culture?

Where does culture come from? • Leadership (setting mission/vision) • Selznick (1957) says purpose-setting is essence of leadership • Shared values • Religious groups, etc. • Stories, legends, myths, symbols • Reward systems • Professional values • e.g. engineers, doctors, accountants • Historical accidents • Morgan makes a big deal about enactment – what is it and why is it important? • Hegemony and ideology • Indoctrination of masses, coalition with powerful • Hrebiniak mentions “cultural due diligence” on new recruits

Changing a culture • According to Hrebiniak: • Don’t try to change attitudes, change behavior (and attitudes will follow) • Behavior doesn’t change easily in the face of requests to do so. Requests are “useless and ineffective”. • Change people, incentives, controls, processes, and structure • “Get the right people on the bus” • Changing incentives might even affect the “wrong people” • Beware of excessive speed • People must build a belief in the new culture • Performance builds belief • One change agent advocates manufacturing ‘short-term’ wins • Can cultures and cultural change be measured?

Changing culture: A comprehensive list • trigger shifts in the established mindset • breakdown habitual behavior patterns including routines, structures and rewards • move outside established information channels • use data and analysis to shock people • introduce new people and outsiders • co-opt or break adversarial political alliances • revamp employee communication mechanisms • training and development • use symbolism , ritual, and enactment • reward new behavior, celebrate success • provide leadership

Culture change at Home Depot • How did Nardelli change Home Depot’s culture • Through the use of mechanisms to alter the social interactions of people in the organization • the ‘social architecture’ • By adding a “dose of discipline” to the entrepreneurial culture • With standardized metrics, disciplined talent reviews, Monday morning conference calls, mapping the HR process, learning forums, focus on accountability • Was this a major achievement???

Strengths of the cultural metaphor • Emphasizes the symbolic significance of what we do • We learn that organization and shared meaning may be one and the same • We see how success hinges on the creation of shared meaning • Leaders and managers gain a new understanding of their impacts and roles • We see that organizations and their environments are enacted domains • Strategic management is understood as an enactment process • The metaphor offers a fresh perspective on organizational change

Limitations of the cultural metaphor • The metaphor can be used to support ideological manipulation and control • Culture is holistic and cannot readily be managed by a simple checklist • Important dimensions are invisible and what is easily seen may be relatively unimportant • Culture usually has a deep political dimension

Seagram Case • Questions: • Why has Seagram initiated a values initiative? • How well has the implementation been done to date? • What tools and techniques are more potent than the use of explicit corporate values? • If you were one of Seagram’s executives, how would you respond to each of the five challenges at the end of the case? • Actions on recommendations • Punishments for values violators • Rewards for value champions • Values for MCA/Universal • Sustaining and consolidating the change?

Power

Organizations as political systems • Power – the ability to get what you want, when you want • Politics – the process of acquiring and using power • As no-one can get everything they want when they want it, politics inevitably involves coalitions, compromises, and conflict management. • According to Morgan, many organizations have strong autocratic tendencies – does that mean CEOs always get what they want?

Sources of power • Toffler • Power rests on delivering or withholding: • Violence (feudalism) – coercive power • Wealth (capitalism) – reward power • Knowledge (third wave) – expert power • Lukes • Three faces of power • Ability to make decisions (authority) • Agenda-setting: ability to decide who/what/when/how decisions will be made (influence) • Ability to shape perceptions so that policies that favor the powerful are seen as natural, normal, or rational and therefore not questioned (ideology or enactment) • Resource Dependency

Resource Dependency • Control of: • scarce resources, • decision processes, • knowledge/information, • boundaries, • technology, uncertainty, • informal networks, • counter-organizations • Units that deal with the critical problems of the organization will typically have power • Dependency is the opposite of power

Exercise • How political is your organization? • Which department has the most power? • Does this follow the predictions of resource dependency theory? • How much conflict is there between departments? • Does politicking hurt performance or limit the strategic choice?

Power and ethics • Are these tactics from the 48 laws of power ethical? Necessary? • #2 Never put too much trust in friends • #3 Conceal your intentions • #7 Get others to do the work but take the credit • #10 Avoid the unhappy and unlucky • #11 Learn to keep people dependent on you • #14 Pose as a friend, work as a spy • #15 Crush your enemy totally • #32 Play to people’s fantasies • #38 Think as you like but behave like others • #45 Preach the need for change but never reform too much

Great intimidators • Angle • Social intelligence vs political intelligence • Empathy/soft power vs. intimidation/exploitation • Leverage strengths vs. leverage fear/anxiety • Behaviors • Get up close and personal, be angry, keep them guessing • Know it all, be aloof • Counters • Do your homework, work harder • Laugh at their antics, earn their respect, call their bluff • Keep your perspective, stick around

Implications for Strategy Execution • Dysfunctional organizations • Often have misaligned power structures • Can be very resistant to new initiatives • Hrebiniak argues that boards will often discipline CEOs that don’t make tough decisions (really?) • Successful execution may require co-opting or destroying the dominant elite • Ability to use hard power as well as soft power • Strategic choices create new fiefdoms

Donna Dubinsky Case • Questions: • Why was Dubinsky initially so successful at Apple? • How and why did things unravel for Dubinsky? • What changed in the business and the Apple context? • Why did she respond the way she did to the JIT proposal? (Put yourself in her situation -both intellectually and emotionally) • Do you think she and others at Apple could have done things differently? • How should Campbell respond to Dubinsky? • What are the key lessons from this case for strategy execution?

Strengths of the political metaphor • We see how all organizational activity is interest-based • Conflict management becomes a key activity • The myth of organizational rationality is debunked – rational for whom? • Organizational integration becomes problematic • Politics is a natural feature of organization • It raises fundamental questions about power and control in society

Limitations of the political metaphor • Politics can breed more politics • Is there an optimal level of politics? • Is zero the target? • It underplays gross inequalities in power and influence • Can a marketer ever become CEO in an engineering organization?

Pfeffer’s practices Employment security Selective recruitment High wages Incentive pay Employee ownership Information sharing Participation & empowerment Self-managed teams Ctd. Training Rotation and cross-training Symbolic egalitarianism Wage compression Promotion from within Long view Measurement Overarching philosophy People advantage REALISTIC OR NOT?

Organization Theory: Strategy Implementation Process