MMPH-005

ORGANISATIONAL DEVELOPMENT
AND CHANGE
Indira Gandhi National Open University
School of Management Studies
 MMPH-005
Organisational
Indira Gandhi National Open University
School of Management Studies
Development and Change

BLOCK 1
UNDERSTANDING CHANGE 5
BLOCK 2
ORGANISATIONAL DEVELOPMENT 127
BLOCK 3

FORMS OF ORGANISATIONAL CHANGE 213

BLOCK 4

ROLE OF CHANGE AGENT 293

COURSE DESIGN AND PREPARATION TEAM
Prof. K Ravi Sankar, Mr. Parth Sarathi*
Director, SOMS, AGM
IGNOU, New Delhi BHEL, Noida
Prof P Jyothi Prof. B.K. Dhup*
School of Management Studies, Fore School of Management
University of Hyderabad, Hyderabad New Delhi
Prof. Sita Prof. Ravi Chandra*
School of Management Studies, Osmania University, Hyderabad
University of Hyderabad, Hyderabad
Prof. Sasmita Palo Prof. Pestonjee*
TISS, Mumbai Ex-IIM, Ahmedabad
Prof Shalini Garg Prof. Gopa Bhardwaj*
SOMS, I.P. University Delhi University, Delhi
New Delhi
Prof. Sumita Misra Prof. K. Hari Gopal*
KSOM, KIIT University Director
Bhubneshwar Institute of Public Enterprise
Prof. Nayantara Padhi Hyderabad
SOMS,IGNOU, New Delhi Course Coordinator and Editor:
Prof. Srilatha
SOMS,IGNOU,
New Delhi

Acknowledgement: Parts of this course is adapted from the earlier MS-10:

Organizational Design, Development and Change and MS-25: Managing change in
Organisations courses.The persons marked with (*) were the original contributors
and the profiles are as it was in that material.

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MPDD, IGNOU, New Delhi

January, 2023
© Indira Gandhi National Open University, 2023
ISBN: 978-93-5568-733-3
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 CONTENT

BLOCK 1 UNDERSTANDING CHANGE 5

Unit 1 Concept of Managing Change 7
Unit 2 Types of Change 33
Unit 3 Factors Critical to Change 67
Unit 4 Organisational Culture and Change 95

BLOCK 2 ORGANISATIONAL DEVELOPMENT 127

Unit 5 Organisational Development: An Overview 129
Unit 6 OD Interventions 146
Unit 7 Organisational analysis 172

BLOCK 3 FORMS OFORGANISATIONAL 213

CHANGE
Unit 8 Mergers and Acquisitions 215
Unit 9 Turn Around Management 231
Unit 10 Process Based Change 242
Unit 11 Group Based Approaches to Change 266
Unit 12 Evaluation of Organisational Change 283

BLOCK 4 ROLE OF CHANGE AGENT 293

Unit 13 Roles and Skills in Managing Change 295
Unit 14 Managing Resistance to Change 332
COURSE INTRODUCTION

This course explains the importance of Organisational development and

how change is a part of organisational dynamics.
The first block deals with the concept of Managing change, types of change,
factors contributing to change and how culture plays an important part in
bringing change in organisations.
The second block explains what exactly organisational development is,
types of interventions which is to be used for identifying the issues leading
to change and finally explains after obtaining the feedback how they should
be analysed to bring change in the organisations.
In the third block different forms are explained to bring in change in
organisations. The forms explained in this block are mergers and acquisitions,
turnaround management, process based change and group based approaches
to change. Finally how to evaluate implemented change is explained.
The Final block explains the types of roles a change agent has to perform,
competencies and skills required for a change agent, the factors contributing
to resistance of change and how they can be minimized are explained.
 BLOCK 1
UNDERSTANDING CHANGE

5
UNIT 1 CONCEPT OF MANAGING
CHANGE

Objectives
•• After going through this unit, you will be able to understand
•• meaning and relevance of change in organisation,
•• nature of change,
•• factors which affect change.

Structure
1.1 Introduction
1.2 Developing the Change Mindset
1.3 Some Key Change Themes
1.4 Categories of Business Change
1.5 Triggers for Change
1.6 Creating the Future
1.7 Summary
1.8 Self-Assessment Questions
1.9 Further Readings /References

1.1 INTRODUCTION
It is often said that change is the only reality, rest is subject to change.
Traditionally and universally it is believed that people resist change due to
its displacing effect overtime. However, people move towards its acceptance
through negotiations over the ‘price’ of change.
History has time and again proven that the process of change is inevitable
in the progress of mankind. The ability of the human race to innovate has
brought about radical transformation of society. All the countries of the
world are undergoing some kind of change which is especially true in the
context of organisations. At times like this, more than ever, it is essential
that the organisations appreciate the human resource management skills
required to successfully handle the transformation of industry through
one of its most critical periods. Hence, the purpose of this unit is to create
an understanding of the dynamics involved in the change process in the
organizational context and help to clarify the notions involved, in it.

1.2 DEVELOPING THE CHANGE

‘The times they are changing’, sang Bob Dylan, and ‘more’s the pity’
perhaps you say. Perhaps, you are a manager in a manufacturing or Service
Company or a public authority, and ‘they’ won’t let you alone to get on
7
Understanding Change with things. Always something new is coming in, the organisation is
restructured, the company gets taken over, or new, government regulations
or deregulations come in and change everything. Change- it’s the one aspect
of life that never seems to change. It happens all the time. The only thing
is that there seems to be more of it and it happens more and more quickly.
There’s never time to catch your breath. You are then totally fed up with
change. ‘There is no stability nowadays’. ‘You no sooner get things sorted
out and there is a restructuring, a product change or new competitor, running
away with our business’, ‘You just get the line running smoothly and reject
to a minimum when in comes some new technology or a new product is,
introduced and chaos is let loose’. You sigh for the old days when you knew
where you were; yes, things did change then, but much more steadily. You
had time to absorb the change- or so you think now.
Who is a Manager?
You are a manager. What does this mean? The word derives from the ancient
French word for handling horses and a later one for handling the affairs
of the kitchen. Synics might replace horse by donkey, but all would see
the analogy of keeping an organization a live through the activities of the
kitchen.
What is Management?
It may be defined as: “Risking yourself in the mobilisation of resources
and relationship to add value to the enterprise”. Let us now analyse this
defecation phrase by phrase.
Risking Yourself
Every time you make a decision you risk yourself. You chop off one branch
of a tree in of another. That is the meaning of the word ‘decide’, from the
Latin decidere, meaning to cut off. It is a risky business, because you cannot
easily stick back the branch you have chopped off.
Mobilising Resources
Nothing happens without resources; there are never enough of them and
they won’t always readily provide the advantage that you seek. So there are
people, materials, money, markets, ideas, components, space and time and
many other resources all requiring to be mobilized before you can produce
and sell what you have to offer. The word ‘mobilize’ has a very active ring
about it, and management is about activity.
Mobilising Relationships
Mobilising resources would only take you so far unless you got the
relationship right, especially those of people. People meant workforce,
suppliers, customers, shareholders, government, community - all the
stakeholders. They had to be given a sense of sharing ownership for what
was going on - and managers are the prime influences of this process. They
are people-linkers.

8
To add ‘Value’ Concept of
Managing Change
We could have said profit, and often this is what we mean. But we can
be in the voluntary of the public sector where the community has to be
served, effectively and economically, but where it has been decided by
the government or people or both that the activity must be run outside the
normal market mechanism of shareholders and stock markets.
To the Enterprise
Not ‘organization’ or ‘firm’ or ‘business’ or ‘company’. All these would be
perfectly appropriate, but we wanted a word that would have a forceful,
thrusting, innovative, creative, exciting flavour, and enterprise seems to
capture that approach.
Your Power as a Manager
So, as a manager, you are almost abound to participate in the processes of
change in enterprise for which you work. But how? In your company you
may feel that you have a little change to influence the process of change. All
the decisions are taken at the very top and what the chief executive says is
final. So the change decisions are handed down an you have to get on with
handling and implementing them.
But surely you will still have an effect on how the company or enterprise
performs in the implementing of change. Everyone in any enterprise is
involved in change in some way or other, and its success or failure depends
on everyone. The ideal company may well consult a large number of
its employees about decisions concerning change-what to change, how
to change and when to change. It does, its employees will have a sense
of ownership in the changes and are more likely to co-operate in their
implementation. Of course there are, in even the most participative of
companies, situations where there is no time to consult everybody or where
secrecy is of the essence. Such as in some merger or acquisition decisions.
And some companies are just autocratic anyway.
But whatever the situation, at all levels every manager has some contribution
to make to the process of change, and to make that contribution requires a
certain attitude of mind - a certain mindset. To identify this mindset, and to
assist its growth in the readers and indeed in the enterprise for which they
work.
Change at the heart of life
It is really meant that change is at the very heart of life. Think about it for
a moment, independent of business as such, and look at the role of change
in general. You could say that life is change. From conception to death we
are changing physically every microsecond, and certainly from the first
moment of independent existence we are changing mentally, emotionally
and spiritually. Physically we know that in every seven year period every
molecule of our body has changed, very slowly and gradually, and we are
certainly not the persons we were. Similarly we are not the same in our
mental, emotional and spiritual senses.

9
Understanding Change For one thing, in every waking moment, and probably when we are asleep
as well, we are taking in new impressions and rearranging the old in the
light of the new, so that there is no such thing as stability. Neither would we
want there to be. Several significant schools of philosophic thought have
stressed this.
We are all the time taking into our minds new impressions through the senses.
We see things, we hear things, we touch things, we taste things, and beyond
that we have feelings about the messages our five senses bring to us. They
make us sad, happy, impatient, excited, worried, angry, uplifted, determined,
uncertain, jealous, envious; they make us love, hate, sympathise, empathise,
co-operate, oppose, fight; and these emotions, being stirred, provide us
with energy and impel us to action.
All these impressions and the emotions they stir are recorded in our
memories. Everything we have ever seen, heard, tasted, touched, smelt and
the related emotions, are indelibly written down in our human audio-video-
taste-tactile-olfactory type machines, in our brains or at least in our minds,
if these are not the same. These data are all getting added to all the time. As
more ingredients come in to the mind, so the earlier ones seem just a little
different - they are expanded of perceived in a new light.
Of course, if we had the whole of the tape machine playing at once, we
should ‘go out of our minds’, and so memory is selective. The whole range
of materials is not making its presence felt consciously all the time. A lot
of it is buried, as we sometimes say, ‘in the depths of the unconscious’, but
it is still there and gets called up by new events, and by being linked with
them it is changed.
We have an exciting picture of the human mind as a flow of impressions,
and emotions and ideas which connect them. The thinking we do about the
impressions is part of the change process, because the bringing of things
into new connections presents them in new light- indeed changes them.
So if change is the microsecond by microsecond essence of living, our
theme of the need for a change mindset should not be difficult to absorb,
because it fits with the very structure of our minds and of our thinking.
Life as Interaction
A significant contributor to this perception of existence is George Henry
Mead, late of Chicago University. He lectured much and wrote little, but his
students felt that what he is saying was so powerful that they took detailed
notes and produced his material so that we, after his death, can reflect upon
it. He gave rise to a sociological and psychological theory, academically
known as ‘symbolic interactionism’.
A major aspect of it is that people interact by symbols - words and non-
verbal signals in particular. Every interaction makes a contribution to the
mental make-up of the others. When you have had an interaction with
someone, you go away a different person. You have each added something
to the other. Mead described each individual having of being a central
‘I’ around which a whole lot of ‘me s’- less stable and derived from the
interactionswith others- were revolving. The ‘I’ then constantly reacted to
10
all these constantly changing ‘me and absorbed them into itself. It was, of Concept of
course, a concept rather than a literal fact, but when we think about the Managing Change
people who have influenced us and changed us, we know it to be true. You
who have read these words as a result of our interaction, are a slightly
different person from the one you were a few moments ago. So being human
and change go together and this should make the quest of this unit easier.
Living Experience
There is another who has something to offer to this theme of human
becomings and what they become. This is the Case Western Research
University in Cleveland, Ohio, David Kolb.

Work and Life

Experience

Testing out Reflection on

Principles in New Experience
Situations

Drawing out
Principles and
Concepts

Figure 1: Learning Cycle, based on the ideas of David Kolb Experimental Learning

He is the formulator of the well-known Kolb Learning Cycle. To sum it up,

he says that learning is all about having experiences (in line with Meaad,
with life as a series of experiences which makes us what we are). He goes
on to say that then next stage of the cycle or spiral (see Figure 1) is that
we reflect upon the experience that we have just had. Thirdly, we draw out
some concepts and some principles from this reflection. Finally, we test out
the new concepts in new situation so that they become part of the ongoing
experience.
David Kolb does not use the words ‘process’, interaction or ‘change’, but
this is what he is thinking about. It is noteworthy that he uses the word
‘learning’, and if you think about it, all these ideas together and form a
framework within which we can think about change and even learn to love
it and welcome it. Learning is itself a process of change. Something is added
to our perception and prepared us for the next impression, which will change
our understanding yet more, however minutely. What David Kolb is talking
about is the normal scientific approach, where observations made are the
normal scientific approach, where observations are made and reflected upon
to yield theories from which hypotheses are derived and tested out in action,
creating new events and experiences.

11
Understanding Change Change is Learning
The Kolb contribution is a significant one because it practically equates
change and learning. When you learn, you change. When you change, you
learn. A book on change is therefore also a book about learning.
Reginald Revans of Action Learning frame would make a distinction with
two little symbols L>C and C>L. If learning is represented by L and change
represented by C then the first symbol means you are ahead in the game-
your are learning faster than things change. The second can spell disaster,
because things are changing faster than you are learning, so that you are
behind in the race.
Nevertheless Revans is in harmony with Kolb in that his contribution
of Action Learning is based on the concept that people learn more from
reflection, discussion and working together on real live issues than from
being lectured at. They learn from each other and the learning is relevant,
and even when the classroom is being used for input, it is important to
provide plenty of scope for learning in this way.
A Positive Approach
These perceptions of what is to be human can help us to take a positive
approach to change and make it work to our advantage and to that of our
enterprise. You are only really alive when you are changing. It is the essence
of personal growth, it is the basis of relationships with other people, and
without it there is no learning and no progress.
Yet even when we acknowledge all this, we are prone to resist change. We
fear it; we avoid it and we sign for the status quo.
......... the task of industry is continuously, year on year, to make more and
better things, using less of the world’s resources. Management in particular
is not about the presentation of the status quo; it is about maintaining the
highest rate of change that the organization and the people within it can
stand.’ (Sir John Harvey Jones).
SOME KEY CHANGE THEMES
Predicting the future is a tricky business. However, there is a need to
have a future perspective in order to introduce constructive change into
the business of the enterprise. One needs to have some broad awareness
of whither the future is tending, a picture of future trends Stan Davis saw
an interrelationship between physics and management. Both physics and
management are concerned with “the interrelationships of the parts with
a whole”. He saw time, space and matter which are fundamentals of
physics, as equally fundamental to the shaping of tomorrow’s business and
organizations. He was seeing them as resource-time, space, and matter-
not as constraints, and considered them as business resources from the
customer’s point of view.
Any time
The first dimension of physics which he links with business needs is time.
As we respond to and persuade customers, they use out time until they
12
decide to buy. Then we deliver, we are using theirs. We have to shorten Concept of
the elapsed time between their decisions and the fulfillment of their need. Managing Change
The customers want the product of service when they want it, not when
the company decides to provide it. They want it any time, and technology
already provides many examples of meeting this need. There are thousand
of services, from provision of spectacles to the development of your holiday
snaps, where customer waiting time has been reduced from days and hours
to minutes. Davis suggests that this should be seen as the beginning of a
conceptual shift, a toward getting as close as possible to immediate meeting
of the customer’s needs.
Immediately avilable response is growing in the banking industry, with the
growth of account debiting by automatic tellers at any time of day or night.
Information has a time value, so that monitoring the production line in real
time; or answering a business query immediately, benefits customer and
provider. Computer-aided design and development straight to production
and consumption.
The technology is there. It is simply that managerial thinking hasn’t caught
up with it. This is where future mindset comes in, developing all the time
to keep pace with the future. Those who provide goods and services in
real time gain competitive edge over those who don’t there is no time lag
between the identifying of a need and its fulfillment.
Anyplace
Customers want the productor service where they want it. They don’t just
want to thinks it is convenient to hold it. They want it at anyplace. Already
there are plenty of examples of this. We all carry around pocket calculators
where once we would have had to go to the office to use a desk one. Month
bymonth the number of people who carry the phone around with them
is growing, and they no longer need to go to where the phone is. They
practically wear it. Portable computers of the lap variety enable business
people to do their spreadsheets on the plane; home entertainments systems
are now designed for self-assembly, so that you no longer have to wait for
the technician but within an hour of purchase you are enjoying the fruits
of your investment, having it home in two or three boxes in the car. The
customers, in effect, does part of what would previously have been done
at the factory, as well as providing the transport. The manufacturing chain
of the goods and services ends in the hands of the consumer in their own
physical space.
The ability to provide the product in any place is facilitated by the advance
in electronics, whereby a million electronic components can be placed
on a quarter of an inch square of smelted sand. The information carried
by electrical impulses demolishes space as well as time so as enables the
customers to enjoy both benefits. No doubt all these innovations brought
a lot of unwelcome change to those who the status qu, but those with the
future mindset prevailed.
These concepts of any time and any place also enter into the whole way a
corporation organizes itself. It is becoming less significant where you work.
The number of home- workers is on the increase, with ultimate benefit to
13
Understanding Change transport problems as the people away on their computers. They still need
human association and this is provided by the network. It is the ultimate in
decentralization, which as after all about place. As people work in networks,
less dependent on space, so headquarters building are less inhabited and
organizational hierarchies flattened. Middle managers find a new place
between the producers and the customers, instead of between the senior
managers and the supervisors.
No matter
Thirdly, the customers want the goods or service to be accompanied by
intangible benefits associated with availability at the right time and place
and to express values they require. For example, the man who came over
the Christmas holiday, diagnosed and corrected a very small fault which had
put Edgar’s central heating out of action, and it right, wasn’t him a spare
was selling peace of mind. That is the value he gives even when he’s not
needed, because he will come if he is a Edgar knows that.
Productivity is defined not in terms of tones of goods produced, but in value
added per employee. People, as Theodore Leavitt pointed out long ago,
don’t really buy goods and services. They buy a value - something they
value. The enterprise providing the value is able to share economics with
the consumer by using as little matter as possible in the preparation of the
goods or services. So automation and materials technology keep down the
amount of processing and actual stuff which has to go into the provision.
It will be produced more quickly and cheaply, and with less final bulk and
weight. Davis encapsulates all this competitive advantage in his phrase ‘no
matter’.
‘No matter’ as a concept also includes the role of the disposable, though
we have to watch its impact on the environment. But there are throwaway
razors, diapers, cameras and pens. The idea of ‘no matter’ also covers
the idea of the invisible purpose behind a sale. To perceive it opens up
opportunities of lateral thinking and further beneficial change. The invisible
purpose behind a drill is not the selling of drills as such, but rather to sell
holes. If you use a laser drill, you are very much into the realm of ‘no
matter’, for the laser is itself non-material and its produces holes which
are by definition the absence of matter. This is all a question of tangible
products fulfilling intangible needs. Ideas like this can transform a business.
It is all about effectiveness of outcome rather than efficiency of inputs. So
the physical and the intellectual blend in the marriage of the change mindset
and the future mindset.
Mass Customisation
Finally, Stan Davis gives us the paradoxical ideas of ‘mass customisation’.
This expressed the ideas of providing the customer with precisely what he
or she requires, such as a garment to suit a bulky or a slender something that
is non-standard, yet can be produced goods of standard size, weight or other
requirement. The technology now permits the non-standard to be produced
on the standard line. Just a change of the computerized instructions and the
trick is performed.
14
Gone the long wait while something is made to measure. The same technique Concept of
can be used to provide cultural variations required in various parts of the Managing Change
world without setting up a special production line. Mass economy provides
the benefit of scale; mass customization allows for the differentiation and
individualization of requirements.
Future Trends and Change
The contribution of Stan Davis to our thought is variable. He enables us to
group the changes which have had the biggest impact on business, industry
and society under types of technological development. Not so long ago
you can imagine how some established business would have resisted such
changes, no doubt thought of them as an unrealistic piece of futurology. Let
us stick to what we know we are good at and so on.
The four concepts and the examples given illustrate what we have been
saying about the need to approach the present from the standpoint of the
future. That’s how all these developments occurred -so much so that
we find it difficult to realize the amount of resistance they initially caused.
Many of these developments are at a relatively early stage, so there is much
more to follow. It is essential that managers who are going to have to cope
with such changes see them as a part of their functions to educate their
workforces to understand the nature of the changes we can expect, of the
world in which we live and the future we can create.
The Future at Work
We have already mentioned, in dealing with ‘any place’, the changes which
are happending in the nature of work. Some of the best writing on this
subject has been by Charles Handy in his books The Future of Work and the
Age of Unreason. A proper of the changes which are developing in working
methods and hours, and in careers and employment patterns, can help
people to be less anxious about the apparent insecurity caused by changing
technology, methods and external market forces. As the pattern of work
changes, lifetime work for one employer will become increasingly rare, and
wider opportunities will emerge, though not without some hardship on the
way.
Work is affected way in which technology and social and economic change
act together to create an information society, where information not only
keeps us informed to an unparalleled degree, but also actually tells inanimate
things what to do, thus drastically reducing the need for human beings to
mind machines and perform basic processes. In his two books Professor
Handy makes it clear that the days where everybody expected to work 47
hours 47 weeks for 47 years are gone.
We are in the age of what Handy calls the ‘shamrock organization’. Answering
to the three levels of the shamrock, organizations are increasingly employing
three categories of worker. There are the core ernployees who provide the
permanent staff, performing the central activities; then there are the specialist
functions increasingly carried out by contractors either as individuals or as
companies; and, thirdly there are the part-time workers who carry out the
functions which are irregular, seasonal or variable. At different times lives,
15
Understanding Change in people may find different work styles suit them better. The parent with
care of a child may prefer for a period to the part-time; a person retired
from his or her main career as a core worker may prefer the freedom which
contract work provides.
People may actually have a portfolio of approaches of work from which
they invoke the element which suits the particular part of life cycle. The
portfolio may include wage work, feel work, home work (domestic, do-
it-yourself, etc.) gift work (for charity or the community), and study work
(self-education), hobbies. It’s all work, and our identity as people does not
depend on a particular full-time employment which refer to when they ask
what we do.
The implications of all this are vast both for business and the individual. If
society can get it right, it may mean more leisure and freedom. It will also
have a bearing on the concept of career for life, which is also have a bearing
on the concept of a career for life, which is also creating problems for many
companies where the career ladder has fewer rungs up which to climb,
giving rise to the phenomenon known as ‘the plateued manager’. In fact,
ladder climbing may go out of fashion with the reduction in the number of
rungs, due to the removal of whole tracts of work through the impact of and
other technology. The challenges of the work itself will have to be the main
motivator, and the cut and thrust of seeking promotion will be diminished,
to be benefit perhaps of both company and individual.
In addition, the types of employees required are undergoing radical change.
Hardly that 70 percent of all jobs in Western Europe will require mental
rather than manual skills by the year 2000. Half of these brain workers will
require higher education, which enough of them are certainly not getting in
Britain or indeed in most countries.
The role of rewards in companies will undergo change, and all sorts of
ideas are being canvassed and linked with the tax system; zero income tax,
social dividends, educational credits to be spent over a life time, a national
income ingenious ways of ensuring that the money is there from types of
taxation which leave more choice and yet enhance the incentive ways of
ensuring that the money is there from types of taxation which leave more
choice and yet enhance the incentive to be entrepreneurial. Businesses and
governments are going to have to study all these proposals with care, and
the work of human resource management will undergo a radical reappraisal.
If all employees could understand these trends and regard them as a
bandwagon to be jumped on rather than as a threat to be resisted, and if
trade unions could see them as opportunities, resistance to beneficial change
would be diminished to the advantage of all. But even an insecure status
quo is usually preferred to an unknown future. However. managers and the
whole workforce are going to have to come to grips with alternative ways
of rewarding achievement, at the same time paying for the needs of society.
To understand these future scenario now will make it possible to introduce
change incrementally on a ‘win-win’ basis instead of by a destructive
process of conflict.

16
In this whole area of employments the need for a change mindset which Concept of
does not assume the permanence of the status quo, and of a future w h i c h Managing Change
projects itself into the future and sees new possibilities, is going to be vital.
There are revolutionary trends at work. It will be folly to ignore them.

1.4 CATEGORIES OF BUSINESS CHANGE

Change can be better understood by the following box.
The Nature of Change
1. Change can be defined as to make or become different, give or begin
to have a different form.
2. Change also means dissatisfaction with the old and belief in the
new.
3. Change underlines a qualitatively different way of perceiving,
thinking and behaving to improve over the past to present.
4. Change can be seen as continuous and intrinsic to an organization or
as extrinsic and discontinuous.
5. Change can be patterned and predictable or complex and
unpredictable.
6. Change is dual or bipolar. Continuity without change leads to
stagnation, frustration and boredom in individuals and change with
continuity leads to ambiguity, conflict and degenerative pathology
in individuals and organizations.
7. The rate of change is faster than our ability to comprehend and cope
with it.
Source: K. Harigopal (2001 ), Management of Change, p. 26.

Against background of some personal experience of change, and to help you

place your own change experiences into categories from which something
can be learnt for the future, we attempt to list some of the areas in which
change arises and to bring some classification to bear.
However you classify change, the various heading you come up with the
interrelated. We suggest that the main headings under which you could
probably place business change experiences are:
•• Markets changes
•• Technological changes
•• Organizational changes

Market Changes
The market changes, customers want more or less of goods or services,
competitors have begun to get ahead in the race, government decisions have
freed you or constrained you, world events have changed the nature
of people’s expectations, price mechanisms nationally or internationally
have got out of kilter, new technology superseded what your organization
17
Understanding Change was good at, political changes in other countries open up opportunities or
closely entry, and raw material shortages or their prices have shot up. All
these create specific changes in your business, whatever it is.
Technological Changes
The changes in the market place given rise to specific happenings in the
company. If the signs are negative, there will be new urgency in the search
for new products or of new expectations from old ones. There will be the
introduction of if it can be found, in order to re-establish price advantage,
quality pre-eminence or diversification into new products. There will be
the decision to explore areas of the globe where you are not previously
represented.
Organizational Changes
These response to the market place will affect the organization. At worst
there will be retrenchment, reduction in the number of employees, and
reduction in the number of levels of management. That itself might require
new styles of organization, new skills and the upgrading of old ones. The
number of operating sites may be reduced. People may find t h e m s e l v e s
performing totally new functions, which they may like or perhaps won’t
like, at least to start with. The only way to stay in business may be a merger
or to be the subject of a takeover, friendly or hostile. With such ownership
changes, other market, technological and organizational changes may
follow. In some industries it is an endless cycle.
Understanding the Relationship
If every manager and every member of workforce could have some
understanding relationships in the formula for change, then would be some
change that acceptance would be easier. The above three paragraphs sound
simple enough, but when you feel threatened by what is happening, you don’t
think rationally. Feeling takes over. It is all seen as some kind of conspiracy
by employers, managers or governments to look after themselves. No doubt
there can be elements of truth in this, but there is an inevitability about
change: market expectations are not static, new technology is constantly
being developed, and organizational responses are inevitable to these
sequences. It is a simple matter of business evolution. Less secrecy and
more openness, even at some risk, plus a major educational effort to get
everyone in the company to expect change, and indeed to create it within
their own spheres, would smoothen the path of positive change.
Organizational Life Cycles
A useful way of being prepared to cope with business change lies in the
concept of an organizational life cycle. The idea that the individual human
life passes through a series of stages is at least as old as Shakespeare, with
his ‘Seven Ages of Man’. It has been popularized by Daniel Levinson in The
Seasons of a Man’s Life (1978) and by Edgar Schein in Career Dynamics
(1978). We will in particular have read about and perhaps experienced mid-
life or mid-career crises.

18
The organizational life cycle concept simply applies the same idea of the Concept of
life. We now present three possible phases: Managing Change

•• Pioneering
•• Systemization
•• Integration
In the pioneering phase a few entrepreneurial people get together to develop
a new product or service. They are bound to each other by mutual loyalty
and the excitement of discovery and innovation. There is little formality,
fast growth and the early appearance of results.
Then it gets a bit too big for this approach: guidelines and checklists are
needed, but priorities are unclear, and confusion arises where the imaginative
decisions of the earlier days continue to be made on the spur of the moment.
So system has to be introduced: standards are consistency being to matter,
organization charts and job descriptions come into the reckoning, and
specialists are appointed. A bureaucracy has to be created.
In due course this second phase brings to wear its value out. The organization
remote from the customers, there is too much paperwork and too many
paperwork and too many meetings, risk is discouraged, empire-building
happens, and people play things by the book. So change has to be introduced
again. The organization may be decentralized, with autonomous cost or
profit centers and a closer link with customers and suppliers. Some system
remains, but team-working is developed and people are empowered so that
decisions are at the lowest possible level.
Larry Greiner has a similar picture of five phases and five crises which
induce change:
Phrase Crisis
1. Growth through creativity of leadership
2. Growth through direction of autonomy
3. Growth through delegation of control
4. Growth through co-ordination of red tape
5. Growth through collaboration of?
In each case the crises springs out of the accentuation of the previous phase.
Phase 1 -everyone’s doing their own thing and so leadership is needed.
Phase 2 -.when direction is too pronounced, people cry out for freedom and
autonomy. The when they get it (Phase 3), eventually it gets out of hand and
controls are required, which in the course of Phase 4 turn to red tape. The
fifth crisis is a renewed call for strong leadership.
One corporate entity may have divisions, functions or subsidiaries
simultaneously at any or all of these phases. One skill is to match people’s
stages of life to the company phase: entrepreneurial people for Phase 1:
methodical, systematic people for Phase 4, people-careers for Phase 5.
Some might say this order represents of sequence - the young adventurer,
19
Understanding Change the steady applier of experience, the mature recognition that it’s all about
people in the end.
Harry Woodward and Steeve Buckholz in Aftershock (1987).
1. Formative - leader manager; inventing; learning risk-
taking
2. Normative - systems, procedures, measures, guidelines,
formality
3. Integrative creativity - innovation, collaboration, new growth,
freedom on the job
Where does your company or organization lie on these life cycle continually?
Or what parts of your organization lie where? It will help adaptation to
change to know where you stand, and understanding ‘the global scene’ and
having a ‘future mindset’ will help you to find out where you and whether
you are headed.

1.5 TRIGGERS FOR CHANGE

Change are expressed through three main areas: the market itself, the
technology to meet market demand competitively, the organization of
resources and the enterprise to achieve success. We also consider the
tendency of companies to follow a pattern of similar life cycles. The stage in
the life cycle could affect the nature of the changes which might be expected.
The Ashridge Change Data Base
We now want to fill out the picture by examples of specific changes in
business and industry drawn from the Ashridge Management Research
Group’s change Data Base’. This data base was created from an examination
of published and unpublished information about some 200 companies in
the UK, Continental Europe and the United States of America. A detailed
analysis was published in Triggers for Change (Whille, 1989), originally
commissioned by Ashridge Management Development Services Ltd. and
also used on the Ashridge Management College programme, ‘Making
Change Work’.
There were public and private organizations in fields ranging through
engineering; leisure; electronic; computers; heavy equipment; shipbuilding;
financial services; food, drink and tobacco; transport; airlines; energy; travel;
local government; central government; retailing; oil; glass; automobiles;
construction and building materials; chemicals; pharmaceuticals; textiles;
clothing; police; and architects.
The organizations tended to be at the larger end because the information was
more readily available, though this is not to denigrate the significance of the
smaller businesses, which employ a large proportion of the population in
the countries under review.
Table 1 is concerned with the causes of change - what triggered action. Table
2 presents a broad classification of the type of change which responded to
these triggers. These two categories of analysis are not mutually exclusive.
20
Thus the arrival of a new chief executive officer (CEO) may be both a Concept of
response to triggers and a trigger for future change. Managing Change

Similarly, a technological opportunity may trigger changes in work practices,

and these in turn will trigger need for training or new methods of reward.
Change is interconnected and never-ending. If you change one part of the
system, there will be a knock-on effect, and it is very important to be aware
of this. Otherwise a primary change will give rise to unexpected secondary
ones which may invalidate the hoped for benefits.
Table 1: Triggers of change
No. of companies =
178
Financial losses 24
Drop in profits
Increased competition 23
Loss of market share 6
Industry in recession
New chief executive officer 16
Proactive 23
(opportunities or threats foreseen)
Technological Development 8
Staff utilization 2
Note: There is frequently more than one type for change in any one
organization.
Table 2: Types of change
No. of companies = 178

A. ORGANIZATIONAL %
•• Culture 30
44
•• Organizational structure
B. MARKET-LED ISSUES
•• Customer market orientation 30
8
•• New products 10
•• Reduction to core 14
•• Internationalize 11
•• Quality emphasis
C. PEOPLE ISSUES
•• Communication/participation 23
10
•• People matters 6
•• Reward Development 25
•• Emphasis on training and development 15
8
•• New work practices
•• Teams/group/taskforces

21
Understanding Change
D. TECHNOLOGY
•• Technology 16
E. ENTREPRENEURIAL CREATIVE
•• Innovation 4
5
•• Entrepreneurship
F. ECONOMICS
•• Costing cutting 6
9
•• Staff reductions 7
•• Productivity
Note: There is frequently more than one type for change in any one
organization.
Crises Change
Taking the results of the Ashridge Research as a whole, we see that change
was often triggered by the need to meet danger or to avoid impending
disaster. So about a quarter of the triggers for change which emerged in the
research related to change initiated in order to cope with drops in profits,
sluggishness of growth or downright financial losses.
It is not surprising that change will often stem from a threat to financial
results. After all, financial disaster means that in the end there will be no
company. If there is openness in the company, the workforce can at least
understand change of this nature. However, a normally secretive company
will create suspicion if it suddenly becomes open because of crisis. Workers
feel it’s an excuse to bulldoze changes to ‘line the shareholder pockets’.
This suggests that openness is essential in a company where change is way
of life. Of course, too much openness may also depress share values.
Proactive
A quarter of the companies in Table 1 report proactive changes. The trigger
was someone’s perception of the shape of things to come, an opportunity or
a threat. Action was being suggested while there was time. The perception
was practice and the response was proactive. Corrective action was being
taken before a market decline or before technology became obsolete.
Positive action was being taken to seize competitive advantage before
someone else did.
Chief Executive Officer (CEO) and Change
In about 16 percent of the reports analysed, the advent of a new CEO was
identified as associated with substantial change (see table 1). Although
sometimes a new CEO might simply succeed one who had retired in a
normal way, most often the new CEOs were brought in for the very purpose
of handling difficulty. The advent of CEO and the changes introduced go
together as part of the package to deal with crises, so that many of the
actions taken by CEOs appear in Table 2 as types of change, illustrating
indissolubility of triggers and types of change. Strong leadership from the top
certainly is fundamental, and it is appropriate that this major responsibility
of women or at the top should be acknowledged. However, it must never be
22
forgotten that the top person can only achieve success with the support of Concept of
the rest of the employees, managerial and otherwise. Part of the skill of the Managing Change
CEO is to mobilize this support.
Nevertheless we found that our source material often read as if the top
person was solely responsible for the changes undertaken. Obviously we
need some balance here. Often some steps had already been taken on which
the CEO has been able to build an in any event.
Significant corporate change cannot be achieved by one man alone, and
even the active support of all the managers in a company is no more than
the first crucial step. It means touching the hearts and minds of everybody
working in an organization, because it is in those hearts that the organization
actually exists. It does not exist in balance sheets, building or computers.’
Leaders are not found only at the top. There are many leaders in middle
management and on the shop floor, without whom those at the top could not
achieve their results. If their preoccupations are sometimes with relatively
small matters, their success remind little things that often make a big
difference.
There are many examples of CEOs who provided this inspiration and
communicated well with all their staff. They were able to project a vision,
a sense of direction and an energy to get result, Jan Carlzon of SAS and Sir
John Harvey-Jones of ICI, from both of whom we have quoted, come to
mind. Sir Colin Marshall of British Airways (BA) and Ian Hannah of Thistle
Hotels attended all the seminars run from staff of all levels. Sandy Sigoloff,
of the American firm Wickes, and Lee Lacocca of Chrysler stimulated
people even when giving them bad news. Marshall at BA showed his
commitment to serving the customer by going so far as to clean out some of
the toilets, a blaze of publicity, as a signal to everyone.
Mission Statements
Top managers have used the development of ‘mission statements’ as
significant contributions to the promotion of proactive change, often
involving groups of managers and other employees in the work. Mission
statements give the why that inspires every how. The main concept that of
institutionalizing change by reweaving the firm’s social fabric. Of course,
these are high-sounding phrases and may be treated with cynicism by some.
However, they do focus attention, and when worked out in a practical
why and turned into action-plans that affect the bottom line, such slogans,
signals, and mission statements can help to create a culture of change.
Jan Carlzon of SAS, is well-known for the way in which he fired the whole
airline the idea of daily ‘moment of truth’ as employees at any level came
face to face to face with customer who were the real raison d’etre for the
company’s existence. A simple phase - moment of truth - helped change to
penetrate the whole organization. A leader was able to encapsulate of whole
philosophy in a phrase which became a catchword on everybody's lips,
inspiring them moment by moment. Words so used are not to be belittled:
as with Churchill’s in the Second World war, they are tools for winning
battles in their own right -the battle for hearts and minds mobilized against
23
Understanding Change inertia and self-doubt. Manager at any level who have imagination and way
with words can employ them with their own teams you don’t have to wait
for the top man. You can even have a fun competition for such a slogan for
your own work group.
Other examples of expressing new missions are foud in the Prudential
Corporation to change its self-imagine from one of staidness to drive. Rank-
Zerox identified its mission as everything to do with office documents’.
Dayton Hudson, the American department store, defined its mission as
to be ‘the purchasing agent for our customers’ – simple to understand by
mobilizing attention on the quality of suppliers’ provision. The emphasis
on customer is here on findings and getting what they want. One can well
imagine the practical day to day changes involved in such a reorientation.
Roger Smith reshaped General Motors by ‘demonstrating to fellow
Americans in industry that timidity is not answer’. Retrenchment is no
solution. At GM we say, “go for it. And we have. Tlie vision is paying off’.
Personal Styles
Top people do not conform to one pattern. Some are charismatic, some even
flamboyant. Most of those we have just mentioned tended that way, but there
are others like Mac Booth of Polariod, Sir Peter Walters of BP and Roger
Smith of General Motors who employed their quieter style to shift gear
in whole organizations. Sometimes, too, CEOs were changed, not because
they were not effective leaders, but because they need to match strengths to
situations. Thus, Robb Wilmot in ICL provided strategic vision, whereas his
succesor Peter Bonfielf was adapt at implementation.
Another point to be noted is that effective CEOs do not have to be ‘nice
guys’. They have to be resolute and tough. Some managers do this in an
affable manner. Others may appear almost brutal. Whatever the personal
styles, unpalatable decisions have to be reached and top people need the
resilience to make them and take unpopularity an opposition in their stride.
Organizational Change
Most CEOs seeking to improve result do something about the organizational
structure and culture of their enterprise. Thus it is not surprising that in
Table 2 organizational structure and cultural issues together head the types
of change recorded in the data. Organization is a matter of structuring the
way in which resources are brought and kept together in order to achieve
objectives. These resources include people, places, money, materials,
machines and so on, for a number of these may actually be needed in any
particular type of change.
Nevertheless the emphasis in organization restructuring and culture
modification is not on the resources themselves, e.g. not on people as
individuals, but on the way in which they are interlined and mobilized, where
the resources are positioned, how co¬ordination is ensured and pattern of
share beliefs and values created to give cohesion and provide the basis of
behaviour in the enterprise (see definition of management).
We would expect most changes to have some implications for the ways in
24
which resources and relationships are organized. Whether corrective action Concept of
is being taken or opportunities are being seized, the organization’ change Managing Change
will make a difference to the immediacy of reaching and speed of decision-
making, information-sharing, communications and policy-implementation.
The CEO of Jacobs-Suchard declared that organizational stability was the
biggest barrier to renewal, the German Bank TuB moved from its former
aristocratic approach and Alvin Toffler showed AT&T in America the need
to be ruthless in reviewing its basic premises if it was to avoid becoming part
of a museum of corporate dinosaurs. The culture change brought about by
reorganizing are the most difficult to handle, and the ones that take longest.
They have to overcome the inhibitions of a whole corporate life history, and
they are likely to meet emotional resistance.
Organizational restructuring has contributed most to effective change where
it has been something more than redrawing organization charts. Sir peter
Walters took BP from a hierarchical structure to what he called ‘a solar
system of operating units circling; round the central sun’, with headquarters
as the centre of dynamic system rather than the top of a rigid pyramid. Line
managers were made responsible for achieving financial targets implicit in
change. A matrix structure was introduced to enable manager were made
responsible for achieving financial targets implicit in change. A matrix
structure was introduced to enable managers of subsidiaries to look after
the general interests, as well as those which give local advantage.
Decentalization of detailed responsibility to operating units, with main
board retaining only the broadest direction crops up repeatedly as the route
to successful change. Layers of hierarchy reduced, a move from commodity
to value added products, acquisitions, and international expansions are
exemplified in many companie such as ICI; JC Bamford Excavators (JCB).
ASE (where even before its merger with BBC Brown Boveri restructuring
had eliminated 4000 jobs, but paved the way for the subsequent creating of
6000 new jobs). Electrolux described at one stage by CEO Anders Scharp
as hundreds of independent villages’, through latterly more a matter of
independent networks, but either way, places where people and through
them the company can grow. Jacobs-Suchard (whose frequent changes at
the top encourage managers to maintain a business overview, because they
never know when their specific functions may change, yet the requirement
remains to contribute to total corpcrate effectiveness); and SAS (where
managers of profit centers were expected to act in an entrepreneurial
manner).
Emotional resistance to change emerged in a number of the stories in the
Ashridge data base. It was no easy job to mobilize Swatch to adopt Japanese
methods of making inexpensive watches. Fagor, the Spanish Co-operative,
must have found it emotionally hard to ‘go corporate’. Organizational change
has to take into account the something beyond reason alone embedded in
culture and tradition.
Nevertheless the restructuring of organizations will have to be essentially
rational -and it will move in different directions, depending on need. This is
particularly true of the issue ‘centralise versus decentralise’. JCB Excavators
did both for different parts of the organizations.
25
Understanding Change Many organizations engaged in major organizational and cultural change
found it useful to bring in reputable outside consultants. It helped in thinking
the problems through; a fresh and impartial mind can shed new light on a
situation.
Moreover, the views of outsider can carry weight as they have no axe to
grind and acceptance of difficult decisions may be achieved through their
good offices. Of the 178 companies in the data base, some forty mentioned
the use of consultants, and there were, no doubt, many others who use them
but made no mentioned fact.
The market, quality and change
High in table 2 listing the types of change recorded in the data base, stands
the move to a market-led approach. This is a commercial as well as a cultural
issue. It also links with the developing of new products to meet market
demand, with emphasis on quality and service, with internationalization,
and with the alternatives of diversification on the one hand and going back
to the core business on the other.
We have the ICAI Agricultural Division creating a link between marketing
and every department, SAS spending lavishly on marketing when the
financial situation was grim, and the banks and insurance companies which
expanded into financial services setting up marketing activity as the key to
success. As part of the market-led philosophy a new emphasis on quality,
feeding on the work of Deming, of Juran and of Crosby, is a key change
element in many companies.
Quality which become the key factor in the changes which put Jaguar back
on the map. The British Airways change programme was all about customer
service becoming the consuming concern of every employee. It was
about quality of service to win markets. SAS had already found success
in this approach. The French credit and leasing UFB-Locabail, develped a
change programme which permeated the organization with quality circles.
Continent, the French Hypermarket chain, did the same.
People and Change
Market-led change and concern with quality again demonstrate the primacy
of people when undertaking change. It is a truism that people are a company’s
most valuable resources, but effective change agents really mean it. Every
type of change so far mentioned depends for its success on people, thus it
is not surprising that British Airways launched a campaign for effective
service with the slogan ‘Putting People First’. Similarly, the search for
quality in the two French firms mentioned above was rooted in people; a
major purpose of their quality circles was to give their employees a sense of
owning the enterprise and to create an inner compulsion to provide quality.
People just have to be central to all change activity. The plain fact is that
while machines, materials, and vehicles have change imposed upon them,
they will not answer back. They are passive recipients of change. But people
do and will answer back, and none of the changes brought about in relation
to things and material can happen without people playing their part.
26
So the Ashridge data base has a lot to tell of how people’s heart and minds Concept of
were won, or how they were alienated by lack of clear communications. Managing Change
Resistance to change is natural and cannot be bulldozed out of the way.
Understanding this is important to success change.
Thus communication, participation, training and development, new working
practices, and team development feature prominently in the types of change
taking place in organizations. Rewards development is not mentioned so
frequently in our sources, but it is often associated with the whole package
of change, even when not singled out.
The really effective change agent empowers people. Everyone in the
company is helped to realize that can make a difference, that they have more
power than they think they have. Quality circles, improvement groups, and
decentralizations can all help people to grow.
Training and Development
One gets some idea of the sincerity of a company’s awareness of the value
of its people by the attitude it takes to their training and development, even
in of austerity. The wise company will be like the farmer who, in times of
near famine, still has to sow scarce seed if there is to be a harvest next year.
There are many examples of the empowering role of communication,
participation and personal and collective development (often under-
described as training) in pursuing change through people. Particularly
noticeable in this regard is the use of seminars/ workshops all the way
‘down’ and organization to cascade the vision from the top and integrate it
with visions at all levels from people often nearer to the place which made
things happen on a daily basis.
British Airways brought in ‘Time Manager International’ to involve
all employees in their customer car programme - ‘Putting People First’.
Courage, the brewers, held consultative workshops throughout the period
of building a new brewery, to hammer out the problem of how to use new
technology without robbing work of its interest and skill. The brewery
staff exercise the skill that determines the quality of the beer.
Involvement
Rand-Xerox based its corporate development on a similar concept. It
viewed corporation as having an organic life. It saw it as a living entity
which grown and learns and breathes and thinks, where every activity
contributes to growth of the corporate being (or becoming). Every action
or reaction in the whole body, human or corporate, is a means of learning
to perform more effectively net time- a concept often described as the
‘learning organizations’. At all levels Rand-Xerox set up employees groups
to seek business improvement, especially in quality but going beyond
quality circles.
Many of the companies in the Ashridge data base work on this principle
of continuous improvement (kaizen as the Japenese call it), where it is
recognized that the people doing the actual job have vast resources of talent
and understanding which it is foolish to leave untapped. The heritage of
27
Understanding Change Taylorism was that it segregated thinkers from doers instead of recognizing
that the capacity to have ideas resided in every part of an enterprise.
Massey-Ferguson responded a severe business slump in the early to mid
1980s in farm worldwide by the risk of open communications, conveying
the sense of we’re all in this together’. Any early step management took
was to hold a series of presentation to all workers in workshops, where the
serious trade position was put on the table. Half the labour force was trained
to switch between machining and assembly. These steps were fundamental
to getting the company on course by 1987. The workshops continued then
as means of combating complacency.
Quality and improvement circles
The French hypermarket Continent considered that quality was its key change
issue. It introduced quality circles in a big way, but only after proper training
and preparation. Daniel Maitre was appointed quality circle director after
a training programme with the French Quality Circle Association, which
under George Archier, head of a food- processing company, successfully
tranplanted these cirlces from their Japanese. Their success was due to
the participation of everyone, rather than a copycat following of Japanese
collective cultural norms. Participation within and practical limits became
a way of life in a French individualistic culture. It encouraged a move away
from merely ‘top down’ management system and changed the company’s
cultural mentality.
Maitre made a significant point when he said our training system teaches
young people to participate in the learning process’. He is here defining
the ‘learning organization’ mentioned above. A successful organization is a
learning organization, one where the whole organization and all those who
comprise it are on a continual voyage of discovery living in the expectation
of new insights and findings them in each day’s work. Learning is about
changed, and you will in turn change something or somebody in your
environment.
As in the Japanese companies visited by these French companies, kaizen
became the way of life, where all employees were on the look out all the
time for all the things they could improve, including the little things which
in their own right or in total could make a big difference. This approach
implies that no one is powerless. Everyone has some power to change
something and should exercise it. Quality circles should not be viewed as
system following a precise pattern. They need to be properly organized, but
essentially they inspire a perspective whereby everyone is committed to a
restless search for better ways of doing things - of serving the customer.
Maitre saw them as making people more interested in their work better.
Continent’s 7000 employees all took part in quality circles throughout
the 1980s, beginning with a video programme, followed by meetings
and training till, by the second half of the 1980s there were 100 quality
circles in twenty-eight stores plus a top management quality circle. This
vast programme was a proactive approach taken because it would enhance
success.

28
Motorola holds the formulation of strategy and to help managers to Concept of
understand the nature of the threat from the Asian Pacific Region, Jacobs- Managing Change
Suchard organized everyone in changes during the 1980s by publicizing
‘corporate themes’, establishing ‘rallying points’, and ‘selectively invoking
martial law’ to ‘deal swiftly with crucial issues’.
Company has been using its Crotonwille training centre to nurture a new
breed of managers who will encourage initiative and ensure that is results
are successful. Jack Welch, the CEO, says ‘You want to open up the place
so that people can flower and grow, expand, hit the run. When you are tight
bound, controlled, checked, nitpicked, you kill it.
Technology
Technology is enough a significant part of the change scenario. It is used
to cut people costs; to speed up manufacturing and assembly processes;
to capture information that makes out of money, by having it in the right
place in order to hold in the best currency of the moment; and to facilitate
the meetings of customer needs, anywhere, at any time, in the form it is
wanted and with the minimum of physical material and the maximum of
accompanying service. Technological change has a knock-on effect, so
that change in this field in response to need becomes the trigger of further
change. It pervades the data base even though it has fewer specific mentions
that one would have expected.
Imagination
Many of other types in Table 2 are implicit in those we have been reviewing.
The instilling of an entrepreneurial approach is frequently part of both
organizational and people-oriented changes. Ran-Xerox develops networks
or workers onto the company. In addition, people-related changes often
lead to imaginative changes in working hours and practices. Blue Circle
Industries, the cement-based UK conglomerate, has removed overtime
from its vocabulary by an annual hours policy; people benefit from getting
work done in the fewest hours consistent with quality and with enhanced
productivity.

1.6 CREATING THE FUTURE

Purpose here is to get manager and workforces to think ahead in the sense
of living in possible progressive futures and reflecting them back into
the present. While organizing that we don’t know what the future will be
like, we should exercise and act of will to create new future will be like,
we should exercise an act of will to create new futures. This is a mental
approach – a mindset which projects itself into a changed and better and
resolves so to handle affairs that in one way or another, depending on
inward and outward circumstances for its precise form, it will come to pass.
Business managers will be looking for the opportunities and threats in all
the alternative scenarios. But they cannot persist the future.
With this point of view we don’t say ‘We will do this’. Rather we place
ourselves in the desired future and look back to now from that vantage
point. We use the future perfect tense and say by 2010 we will have….’
29
Understanding Change This tense takes us to then and sees now from there. Thus Professor Stan
Davis called the American version of his book on the future of management,
Future Perfect. The British title is 2001 Management, with the subtitle
‘Managing the future now’.
Davis’s theme is that too often in business life we are too preoccupied with
managing the aftermath of what has happened in the past, in dealing with
the consequences of events which have already happened. He goes on to
add to the English language in his stiking sentence; ‘In the new economy,
however, we must learn to manage the beforemath, that is the consequence
of events that have not yet occurred.
Managing the Beforemath
You see a future event. It is real and you are certain that you and your
organization can bring it about. When that future arrives, it will have arrived
because these steps have been taken. You look at what you have to do to get
there from a more positive point of view. You treat the anticipated future
as already in the past. This does away with if we get there. Instead you are
there and looking back at how you got there. It is psychologically sound
approach.
Looking Back from the Future
This future mindset is essential to the successful management of change. It
engenders a confident approach, where change is welcomed as the only way
to achieve anything worthwhile. It may seem a bit poetic and unrealistic;
but try it at a meeting to discuss future plans. Get everyone to describe
the future as what they have done to get to the future. Treat the meeting
as a review of what has been done. Instead of debating what you will do,
assume it has been done and remind each other of the debates which led
to the decisions which yielded success. This will create some fun -serious
fun –and take some of the heat out of the inevitable disagreements. It could
create a new style of brainstorming. Like Peter Scudamore, you describe all
your plans, proposals and visions in the past tense. You start your journey at
the end. You create a self-fulfilling prophecy.
It need not be as absurd as at first sight it might seem. A board meeting to
discuss the five-year plan can be anything but enlivening. It tends to look at
all the possible obstacles and vary the figures, trying to limit the constraints. It
keeps saying: ‘But if we did this…’ It all to easily become timid and tentative.
Thus picture a special board meeting where the CEO has made it clear that
this is a meeting unlike the usual one’s because everyone is going to be
invited to let their hair down as a way of taking the first steps to creating a
new future. The chief executive asks them all to write on their notepads the
date. Though it is really 10 December 1990 he asks them to write down 10
December 1996. He then begins: ‘It is December 1996. We have just secured
the biggest order for pijongs over known …. There are lessons to be learnt
from this. Let’s just recap how we got here. You remember how in 1990
we invented the concept of pijongs and got everyone talking about them as
a result of our mysterious advertisement campaign. We didn’t tell people
what they were. In fact at the time we didn’t know ourselves.
30
After a little more in that style he asks others to recap the contributions Concept of
they made to what pijongs should be and for everyone to pitch in with a Managing Change
retrospective rehearsal of the arguments for and against, and the alternatives
which were proposed.
He has already warned them to come prepared to talk about their proposals
for new products, and he has told them to be ready for a new approach. At
first they are embarrassed at the idea of starting in the future, but after a
while they begin to see the value, and the flow of ideas expands. Creative
imaginations is kindled and anything becomes possible. The present no
longer constricts.
It is rather like the quotation J.F. made from George Bernard Shaw, who in
took it from Aeschylus: ‘Some people see things as they are and ask why?
I dreams that never were and ask why not?
The much used words ‘vision’ and ‘mission’ relevant here. The following
brief extracts from top managers with a future mindset illustrate the idea:
‘While it is foolish to throw away the past, it is the future that we can affect.
The ability to create manage for future in the way that we wish is what
differentiates the good manager from the bad…. The engine of change
is dissatisfaction with the present and the brakes of changes are fear of
the unknown and fear of the future….It has to be possible to dream and
speak the unthinkable, for the only things we do know is that we shall
know what tomorrow’s world will be like. It will have changed more than
even the most outrageous thinking is likely to encompasses.’ (John Harvey-
Jones, Making it Happen, 1988).
‘It is up to the top executive to become a true leader, devoted to creating an
environment in which employees can accept and execute their responsibilities
with confidence and finesse. He must communicate with his employees,
imparting the company’s vision and listening to what they need to make that
vision a reality. To succeed he can no longer be an isolated and autocratic
decision maker. Instead, he must be a visionary, a strategist, and informer, a
teacher and an inspirer’. (Jan Carlzon, of Truth, 1987).
‘What a company needs is a “director of vision”, whatever he or she is
called….A “director of vision” helps to shape the future…..prevents
corporate myopia and adds a “conceptual quality” to a board bothered about
day to day worries. A “director of vision” can provide an element of magic.
Companies shouldn’t be afraid of that. He or she helps the company to aim
for the products of the future: ones that meet future customer aspirations’.
A prime task of the top leadership of an organization is to give the grand
vision of the future. People at all levels can then break down this vision to
arrive at their piece of the big picture. Indeed we need ‘directors of vision’
at all levels of an organization. The more widely leadership and strategic
thinking are disseminated throughout an enterprise, the more interacted will
its activity be.
As Davis puts it, the leaders of the future must lead ‘from a place in time
which assumes you are already there and that is determined even though
it hasn’t happened yet’. The former boss of ITT, Harold expressed it as
31
Understanding Change follows: ‘You read a book from beginning to end. You run a business the
opposite way. Your start with the end, and then do everything you must to
reach it.

Of course, you may say that this is all for the board, but less senior
managers find this less relevant to their functions. How could middle and
junior managers, supervisors and people on the shop floor or out in the field
apply it? The future mindset applies at all levels and will introduce someone
practical ways of establishing it, of helping everyone to be a change agent.
As Buck Rogers, formerly Corporate Marketing Vice President of IBM,
puts it: ‘The people I enjoy working with most are those who believe that
we can have an impact on the world around us’ (Getting the Best, 1987).

1.7 SUMMARY
In this unit the nature and meaning of change and how different environmental
factors affect change have been discussed.

1.8 SELF-ASSESSMENT QUESTIONS

1. What do you understand by change? Discuss.
2. Discuss different factors which affect business change.
3. Explain the factors which trigger for change.
4. Discuss the future mindset and how one can be ready to adapt to
change.

1.9 FURTHER READINGS/ REFERENCES

Harigopal, K. (2001), Management of Organisational Change, Response
Books.
Nilakant,V. and S. Ramnarayan (1998), Managing Organisational Change,
Response Books.
Pradip N. Khandwalla (1988), Fourth Eye: Excellence through Creativity,
A.H. Wheeler & Co. Private Limited.

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UNIT 2 TYPES OF CHANGE

Objectives
From this unit you will have an understanding of
•• kinds of change
•• turnaround management
•• planning change
•• process of transformation
Structure
2.1 Introduction
2.2 Focus on the Individual
2.3 Focus on the Role
2.4 Focus on Teams
2.5 Focus on the Organisation
2.6 Types of Change
2.7 Turnaround Management
2.7.1 Key Constituents of Turnaround
2.7.2 Process Models of Turnaround Management
2.7.3 Types of Turnaround
2.7.4 Turnaround Performance

2.8 Planned Change

2.9 Work Redesign as a Technique of Planned Organisation Change
2.9.1 Alternative Uses of Work Redesign
2.9.2 Designing New Organisational Units
2.10 Change: The Challenge of Transformation
2.11 Summary
2.12 Self-Assessment Questions
2.13 Further Readings/ References

2.1 INTRODUCTION
There are several models of organizational change. A model is an integrated
way of explaining why and how change takes place, based on a known
and acceptable basic explanation (theory) of relationships of several aspects
involved. It would be obvious that there can be different ways of explaining
change, depending on what theory we follow or use.

33
Understanding Change Two contrasting models of change are the “trickle down” model vs. “identity
search” model. The first is also termed in Sociology as Sanskritisation,
i.e., following the examples of elite group. According to the first model
organizational change occurs because the top management takes a decision
and adopts some new ways (technology, systems, structure etc.) and others
follow it. According to the second model, the urge to develop one’s own
uniqueness and identity will make the group or individuals accept change.
Another way is to look at the external or internal forces as determinants
of changes. The adaptation model emphasises the role of external factors
(a new government competitive environment) in producing change in
organisations (more emphasis on quality, restructuring etc.). According to
the proaction model, the explanation comes from within the organisation (the
decision of the organisation to set an example, to be a leader, to anticipate
future) and act and change itself in response to such an urge.
Yet another explanation of organisational change may lie in emphasis on
the structure or the process. Successful change, according to the first model
(structure model), would require preparing the necessary structural details
(technology, design of the systems), and introduce them systematically.
People will also change, according to the process model, change can be
planned by helping people to develop process competencies (ways of
planning, decision-making, problem solving, collaborating, communicating
etc.), and then people will find new ways of organising etc.
A more comprehensive way is to look at the main emphasis in producing
change-the individuals, the roles, the teams, or the organisations. We shall
use this way of looking at some models of organisational change.

2.2 FOCUS ON THE INDIVIDUAL

According to this model of change, the individual is the prime force
in organizational change. Individuals can promote or resist change. If
individuals get motivated, change is easy. How do individuals get motivated?
We shall consider three explanation this regard: individuals change when
they learn new desirable ways of doing things, they change when they
get non-threatening feedback; they change when their motives change.
Change as a Learning Process: The adoption-diffusion model of change,
so popular in agriculture, is based on the theory of change being the process
of learning. Learning takes place when one is dissatisfied with the present
state, wants a change, sees the alternatives somewhere, debates in one’s
mind about the pay off of the new alternative, checks with others one trusts,
tries the new alternative, assesses its advantages over the old ways, and
finally adopts it. Two main elements of this model are: Change is regarded
as a sequential process, and the rate of change varies from one individual or
a group to another.
There are 8 stages in the process of change in an individual: initiation, motivation,
information collection action proposal, deliberation, implementation, and
statrilisation.
Individuals do not respond to change at the same time. Those who accept
change have been classified into five groups: innovators (about 2.5%), early
34
adopters (about 13.5%), early majority to adopt change (about 34%), late Types of Change
majority (about 34%) and laggards (about 16%).
A large number of studies have been made, and extension practices have
been developed to help people go through the sequential process faster,
and to help “late majority and “laggards” in learning to quicken their pace
of change. One popular method to help is “demonstration” of the new
alternative, by taking people to a place where it has been successfully used.
Change through Feedback: Another model of change is based on the
assumption that change if they get feedback on their behaviour, and also
have a theoretical framework which shows that the current behaviour is
dysfunctional. The feedback need to be objective and non-threatening. A
good example of this model is the work done in schools on changing
teachers style, using Flander’s theory of teacher’s classroom interaction
behaviour. The teachers learn how to score objectively a teacher’s behaviour
while teaching the students. The scoring method is objective and teacher’s
behaviour is scored every third second during the period of teaching. Scoring
reliability of 98% (agreement between two scores) has to be established
before scoring a teacher’s behaviour on “direct influence” (behaviour which
restricts initiative and freedom of the student, like lecturing, criticising,
reprimanding, ordering, asking questions with one known answer) and
“indirect influence” (behaviour which encourages students’ initiative and
autonomy, like student talk, encouraging feelings, asking questions with
multiple alternative answers). Then i/d (indirect divided by direct) influence
behavior is worked out and feedback given to the teacher concerned.
The teachers learn the theory and research results showing that direct
influence behavior results in dependency, lack of initiative, low activity
level, lower interpersonal trust, and low adjustment of students, while
indirect influence behaviour results in the opposite effect. Such feedback
alone leads to change in teacher’s styles and change of the school climate.
(References to the results of work done with this model are given in “Further
Readings”).
Motivation Change Model: The well-known work of David McClelland
on changing larger systems by changing basic motives of individuals is
quite well-known, and has been widely used in India in the development
of entrepreneurship. The basic explanation is that individuals engage in
certain activities because of their dominant motive or psychological need. A
person with affiliation motive (the need to establish and enjoy close personal
relations) will socialise more and enjoy meeting and being with people.
Similarly, a person with achievement motive (the need to excel and to do
something unique) will be engaged in competitive activities, and is likely
to spend more time in work (business, selling, competitive games etc.). If
we can change the main motive of a person, for example, from affiliation
to motivation, the patterns of activities can be changed from “club-like”
behaviour to work related excellence.
Successful attempts have been made to change motivation patterns of
individuals, and produce large change. (Reference to the work is made in the
Readings at the end of this unit.) McClelland has suggested the following 12
35
Understanding Change propositions for designing intervention to help the adults acquire a motives
which they desire to know.
Proposition 1. The more an individual believes in advance that he can,
will, or should develop a motive, the more likely he is to succeed in the
educational attempts designed to develop that motive.
Proposition 2. The more an individual perceives that developing a motive
is consistent with the demands of reality (and reason), the more likely is the
success of educational attempts designed to develop that motive.
Proposition 3. The more thoroughly an individual develops and clearly
conceptualises the associative network defining the motive, the more likely
he is to develop the motive.
Proposition 4. The more an individual can link the newly developed
network to related actions, the more likely is to occur and endure in thought
and action.
Proposition 5. The more an individual can link the newly conceptualized
association-action complex (or motive) to events in his everyday life, the
more likely the motive is to influence his thoughts and actions in situations
outside the training experience.
Proposition 6. The more an individual can perceive and experience the
newly conceptualized motive as an improvement in the self-image, the
more the motive likely is it to influence his future thoughts and actions.
Proposition 7. The more an individual can perceive and experience the
newly conceputalised motive as an improvement on prevailing cultural
values, the more the motive likely is it to influence his future thoughts and
actions.
Proposition 8. The more an individual commits himself to achieving
concrete goals in life related to the newly-formed motive, the more likely
the motive is to influence his future thoughts and actions.
Proposition 9. The more an individual keeps a record of his progress toward
achieving goals to which he is committed, the more the newly-formed
motive is likely to influence his future thoughts and actions.
Proposition 10. Changes in motives are more likely to occur in an
interpersonal atmosphere in which the individual feels warmly but honestly
supported and respected by others as a person capable to guiding and
directing his own future behaviour.
Proposition 11. Changes in motives are more likely to occur, if the setting
dramatises the importance of self-study and lifts it out of the routine of
everyday life.
Proposition 12. Changes in motives are more likely to occur and persist if
the new motive is a sign of membership in a new reference group.

2.3 FOCUS ON THE ROLE

Organisational change can be brought about by changing the orgnaisational
roles. It has been argued that individual change is too expensive in

36
terms of time and effort, and may not necessarily lead to organizational Types of Change
change. If organizational roles can be modified, these will on the one hand
increase individuals’ involvement, and on the other increase organizational
effectiveness.
One approach used for organizational change is that of role efficacy.
Organisational roles are analysed for role efficacy (potential effectiveness)
in terms of the following 10 dimensions. The more these dimensions are
present in a role, the higher the efficacy of that role is likely to be.
1) Centrality vs. Peripherality
The dimensions of centrality measures the role occupant’s perception
of the significance of his or her role. The more the people feel their
roles are central in the organization, the higher will be their role
efficacy. For example, “I am a production manager, and my role is
very important.”
2) Integration Vs. Distance
Integration between the self and the role contributes to role efficacy,
and self-role distance diminishes efficacy. “ I am able to use my
knowledge very well here.”
3) Proactivity Vs. Reactivity
When a role occupant takes initiative and does something independently,
that person is exhibiting proactive behavior. On the other hand, if he
or she merely responds to what others expect, the behavior is reactive.
For example, “I prepare the budget for discussion” versus “I prepare
the budget to the guidance given by my boss.”
4) Creativity Vs. Routinism
When role occupants perceive that they do something new or unique
in their roles, their efficacy is high. The perception that they do only
routine tasks lowers role efficacy.
5) Linkage Vs. Isolation
Interrole linkage contributes to role efficacy. If role occupants perceive
interdependence with others, their efficacy will be high. Isolation of
the role reduces efficacy. Example of linkage: “I work in close liaison
with the production manager.”
6) Helping Vs. Hostility
One important aspect of efficacy is the individual’s perception that
he or she gives and receives help. A perception of hostility decreases
efficacy. “Whenever I have problem, others help me”, instead of
“People here are indifferent to others”.
7) Superordinatin Vs. Deprivation
One dimension of role efficacy is the perception that the role occupant
contributes to some “larger” equity. Example:”What I do is likely to
benefit other organizations also.”

37
Understanding Change 8) Influence Vs. Powerlessness
Role occupant’s feeling that they are able to exercise influence in their
roles increases their role efficacy. The influence may be in terms of
decision-making, implementation, advice, or problem solving.”My
advice on industrial relations is accepted by top management”. I am
able to influence the general policy of marketing”.
9) Growth Vs. Stagnation
When a role occupant has opportunities-and perceives them as
such- to develop in his or her role through learning new things, role
efficacy is likely to be high. Similarly, if the individual perceives his
role as lacking in opportunities for growth, his role efficacy will be
low.
10) Confrontation Vs. Avoidance
When problems arise, either they can be confronted and attempts
made to find solutions for them, or they can be avoided. Confronting
problems to find solutions contributes to efficacy, and avoidance
reduces efficacy. An example of confrontation: “If a subordinate
brings a problem to me, I help to work out the solution.”I dislike
being bothered with interpersonal conflict’’ is a statement indicating
avoidance.

2.4 FOCUS ON TEAMS

Some models of organizational change are based on effective teams as
the medium of change. Organisation Development (OD) emphasises team
development. Work design is also based on making work groups more
effective. While OD mainly emphasises organisational processes, work
designing focuses on distribution of power in the organsation.
Organisation Development (OD)
OD model of change is based on the assumptionthat effective organisational
change would require change in basic values or ethos of the organisation,
strong teams, and involvement of organisational members in the different
stages of planning of change (problem identification, diagnosis, searching
alternative interventions, using an intervention, action, and evaluation).
The change would be effective if the entire organisation (including the top
management) is actively involved in designingand implementing change
with an external process expert.
OD emphasises both team building and development of values, mainly
OCTAPACE values (openness, confrontation, trust, authenticity, proaction,
autonomy, collaboration, and experimenting).Team building is both the
objective and an important medium of change. Members of organisation
work in teams at different levels of change. Enough experience on OD is
available, although not much research has been done. Experience has shown
that OD is a useful model of change, if internal facilitators can be developed
to sustain change. Both research competence and process competency is
needed in OD.
38
Process Consultation Types of Change

Process consultation is one specific approach. Process consultation is the

help given to a client group in understanding and developing methodology
of working in general, and understanding and managing the effects of
work methodology on involvement, alienation, collaboration, conflict,
consensus and such other group processes which effect decision-making is
the members’ commitment to the decisions made.
Schein suggests three main characteristics of process consultation: joint
diagnosis of the process with the client, helping the client in learning the
diagnostic skills, and the active involvement of the client in searching a
solution.
A consultant helps a client group by giving feedback on their ways of working
in examining the data, and in planning improvement in the processes of
working and decision-making. The process consultant helps the client group
move from dependence to interdependence and independence in diagnosis
and action planning. As the term suggests, consultation is on process of
working and not on the client.
Work Redesigning
Work redesigning focuses on distribution of power of decision-making
in work-related matters to the group which is responsible for results. It
is a radical mode, emphasising integration of intellectual(managerial-
supervisory) and physical work (production). Work redesigning is done
by training members of a team in multiple skills, and giving complete
autonomy to the team to plan, supervise and produce products or services.
The role of the supervisors then changes; they plan boundary management
(getting resources needed by the team, solving their external problems)
and educational roles (helping the team when needed on new information,
training etc.).
Work redesigning emphasizes the use of responsible autonomy, adaptability,
variety, and participation. It uses the socio-technical systems and open
systems approaches, suggesting that technical systems need to be integrated
with the social systems, and should be open feedback and change. Self-
regulation is greatly emphasised.
Nitish De, who pioneered work redesigning in India in different settings
(industry, post office, LIC, income tax office, consulting organizations,
bank) proposed seven phases of work redesigning, based on experience in
India.
1) Hostility: Despite preliminary explorations, discussions and
clarifications sought and offered, there is a feeling amongst employees,
irrespective of their positions and roles, that the experiment is a
motivated one, conditioned by the management’s desire to gain and
the researcher’s desire to conduct the research in order to publish.
Internal consultants are seen as motivated by career considerations.
Depending on the dynamics of situation in most Indian organisation,
this phase has been operating covertly. Overt expression of hostility
has often come from isolated individuals.
39
Understanding Change 2) Reluctance: Though some degree of curiosity develops amongst the
members, there is no visible symbol of commitment. However, a few
persons involved in the experiment feel that something is possible
and that some changes for the better can be effected. Positive leaders
among the experimental groups do play an important role in this as
well as in the earlier phase.
3) Guarded commitment and indifference: A substantial number
show interest in what is happening, seeking data, taking initiative in
group discussion, and offering suggestions, while the majority still
remain indifferent. Indifference is more passive compared to the two
earlier stages.
4) Intergroup dynamics: Something of a Hawthorne effect is produced
in terms of attention received. On the one hand, an in-group feeling
gets created at the experimental site and, on the other, a feeling of
jealousy and some amount of hostility is often expressed by way and
caustic by the other groups.
5) Positive Interest: On one hand, in-group feeling brings some degree
of stability to the experimental group and, on the other, some internal
dynamics goes on in terms of power regarding the experimental
scheme. At times it is aggravated by caste and regional considerations,
factional in-fighting between sub-groups with negative and positive
attitudes and others who are in between. The positive groups, however,
acquire more visibility they now take active interest and gradually
take the control functions in the autonomous groups.
6) Isolation of negative elements: The majority are already committed
to the experiment having experienced some positive gains on some of
the key criteria such as variety of job, meaningfulness, social support,
challenge, autonomy, and evolving norms for the group. The isolates
are the negative elements who, depending on how they majority
treat them, either indicate withdrawal of a passive kind or personal
hostility. By and large, however, the group settles down to work out
the operational details of the scheme.
7) Networking: An experimental group takes initiative in looking
outwards and seeks to compare notes and experiences with other
similar groups. This phase becomes a potential force for the
process.

2.5 FOCUS ON THE ORGANISATION

Structural change model have been extensively used for organisational
change. The emphasis is on developing a new structure of the organisation,
in response to the changing environment or the changing priorities of the
organization, and to designing relevant systems (budgetary and information
systems). The changes introduced demand new ways of working, and
individuals respond to such demands. Some good accounts are available of
such changes. Some turnaround work done is also in this category.

40
MBO is a specific example of structural change, using a structured way Types of Change
of helping on organisation plan its time-bound objectives at all levels, and
working to achieve the objectives set. Specific ways are adopted to monitor
the working of group and individuals on these objectives.
While the various models have been suggested in this unit, it should be
emphasised these do not work in isolation, and in practice many approaches
are combined.
Experience has that structural changes, for example, cannot be sustained
relevant process support. Similarly, process facilitation must be followed
by relevant structural changes so that processes could be institutionalised
and sustained.

2.6 TYPES OF CHANGE

Ramnarayan (1998) in his book discusses four different types of change:
1) Continuous or incremental change.
2) Discontinous or radical change
3) Participative change
4) Directive change
The first two types of changes are related to change process and the last two are
related to implementation. The changes which take place in the environment
can be visulaised as to how change in organization grows. Firstly, managers
have to know which aspect of the change in the organizations to continue
which to discontinue. Secondly, managers must “acquire” the skills and
“abilities” to change both in a directive and participative manner. Finally,
mangers must be aware of the different change strategies and learn to use
appropriate strategies.
According to K. Harigopal (2001) ‘Directional’ change occurs because of
intense completion among the companies, changes in government policies
and when there is a failure in business strategy. “fundamental change”
occurs because there is a change in organisation’s purpose or in its goals.
“Operational change” is as a result of improvement in quality, quantity, as
per given schedule, unit cost of operations developing products/services.
“total change” occurs when the entire existing system needs as revamping.
“Planned change” occurs because of certain internal and external demands,
e.g. golden hand shake. “Happened change” is unpredictable. It is not in
one’s control. The change is required as a result of external causes.
“Transformational change” occurs because of basic shift in goals.
“Revolutionary changes” are sudden changes, e.g. automation. “Recreation
change” occurs when an organization wants to be entirely different from the
one which is at present. When there is change in most of the organisations
components, then ‘strategic’ changes takes place. When there is a change as
a result of an event ‘anticipatory’ change occurs. “Relative change” occurs
because of an event or series of events.
Increasing international completion and rapid technological change have
magnitude expectations about organizational performance and adoption.
41
Understanding Change Deregulation and gloabalization of our postindustrial society are putting
an enormous amount of pressure on organizations. Changes in political
alliances and orientations over the entire offer a host of new opportunities.
In response to the new challenges, a number of models of organizational
analaysis and decision making have come to the force. Unfortunately,
in spite of all these up-to-date management technologies and technique,
disasters such as the nuclear explosion of Chernobyl, oil spills, as the loss
of NASA shuttle challenges and Columbia still seem to be inevitable.
Notwithstanding systematic analysis of all possible contingencies, in all
these instances something went terriby wrong. Traditional focus on rational
thinking will not be able to tell the total truth. The reality of the situation
requires different approaches to different situations. We need to learn more
about the puzzles to reach get some clues in solving them.
Let us first examine the process of turnaround in organizations. There is a
river in Africa where every year tens of thousand of wildebeasts attempt
a crossing. Many are swept away by the swirling waters. Quite a few fall
prey to the snapping jaws of crocodiles. Several more are hunted down by
staking lions, leopards, cheetahs and hyenas. Only a few survive.
The corporate world is not very different. Many companies fall to the
grenades of completion; or of adverse technological or social change. Many
more fall because of internal weakness. But unlike the wildebeasts, whose
deaths may sustain other lives, corporate details can put thousands out of
work, bringing misery to them and their dependents. Large pools of skills,
assiduously build up over the year, quicky dry up. Specialized machinery,
often unsleable, instead of productively humming, may turn into a saurian
graveyard. Uncleared debts may ruin, or at least discomfort, legions of
vendors and lenders (Khandwala, 2000).
This grim scenario is not imaginary. Many companies, large and small, fall
by the way side by the thousands every year. In India, during the 1980s, the
number of sick uits grew some ten times, from around 22,500 at the end of
the 1970s to over 200,000 ten years later. Several financial institutions were
facing grave illness because the money they had lent to these companies die
and should society suffer the consequences? We do treat such humans, and
many do recover. Should we not also treat sick companies and help them
recover?
On the outside there is life, richly turbid, a river enriching and absorbing
al in its path, providing space to its citizens to live, lean and die. But inside
these organizational cages are unseen forces dissecting humans and sucking
away all the juices that the river of life honours, leaving only an electronic,
robotic flicker.
But to students of turnaround management, organizations are a lot more
than wastelands of padlocks and turning them around can be as lively a
as storm and as creative as a forest. In these organizations, people can be
creative, heroic, friendly, generaous, caring as also nasty. Turnaround can
be stuff a high drama and griping novels. Not always, perhaps, but often
enough.

42
 Types of Change
2.7 TURNAROUND MANAGEMENT
By analyzing some of the important organizational case studies and
understanding the approaches undertaken by people who were responsible
of turnarounds, Khandwalla observes that:
•• Turnarounds can create rather volatile situation- they evoke images
such as those of war, endangered survival, junkyard pile.
•• During a crisis the turnaround leader acts on numerous fronts. He/She
articulates a credible vision and strategies intent. The CEO’s job is
shaping the concept and the structure by which the concept would be
implemented across the board and often dramatically (boom; strike;
crash). He/She becomes a bridge to various stakeholder to rope them
into the turnaround. The CEO tackles the immediate cash or other
crises on the war footing. He/She imposes a philosophy (Do it now!’),
sometimes by crying a credible wolf (‘The leader’s job is to help
everyone see that the platform is burning’). The CEO keeps up the
energy of people by personal example (work harder than anybody
else, seven days a week, 24 hours a day). To be able to do this need
energy, purposiveness, versatility and loads of infrectious motivation
and optimism in a scenario of despair. As Business Week put it,
‘Turnaround artists have uncommon stamina, a thirst for action, and
some of the biggest egos in business’.
•• The turnaround leader often simplifies the immensely complicated
turnaround task to get the organization moving (‘fix it, sell it, or shoot
it’; improve corporate image, and that’s it; VERC: volume, earning,
returns, cash; ‘business don’t fail, people do’). But at the same time
he/she reserves flexibility (‘one pill cannot kill all ailments; strategies
are simple, there execution is not).
•• The turnaround leader asks some tough questions that can shatter
preconceptions (what’s strategic, what’s diseases, what’s under
performing). To get answers he/she needs to circulate among the
worker (how could we achieve 20-20-20). He/she needs to break
up big problems into smaller manageable ones, and scrape away the
encrustations to get to the core of problems.
•• The turnaround leader often has to take risky actions that can go either
way.
•• The turnaround leader has to discriminate between what is good
for the organization and good for employees, especially the non
performing ones. He/She cannot afford to be soft and sentimental
but he/she need not be callus either. Some turnaround leaders may,
however, use separations or punishments to send a message to the rest
(‘if you can’t get under the limbo rack, good-bye’; ‘public hangings’
of change resisters). Others may move those that can deliver into
strategic positions.
•• The turnaround leader acts authoritarian on the assumption that people
like dependency (‘A lot of people want to be led’; ‘People need to be
told here’s where we are going and why’).
43
Understanding Change •• The turnaround leader has to manage the anxiety and insecurity of
the staff, and turn them into constructive action through straight
talk, consultation, credible plan of action, incentive, decisiveness,
tolerance for honest mistakes, and new skills.
•• The turnaround leader has to co-opt the doubters, the indifferent, even
the adversaries, into a team inspired by a common purpose (sing from
the same song sheet).
•• The turnaround leader has to empower people down the line to take
decisions.
Not all turnaround leaders are like, of course. Some are real Theory X,
while others may be more. Theory Y, humane participative types; some are
intuitive while others may have more of an analytical professional approach,
some are dramatic and some can be paranoid and narcissistic.
2.7.1 Key Constituents of turnaround
A turnaround is a process, a happening spread over many moons, full
of passion and drama, tragedy and triumph. But it is also a structure, an
architecture of management actions which hang together in distinctive
edifices. But to build an edifice there must be constitutes. Fortunately,
turnaround scholars have been quite prolific in producing lists of turnaround
actions which can cohere into ‘gestalts’ of success. The problem is not one
of availability; the problem is one of shifting the marginal or less important
from the critically important. Fortunately, there are studies that indicate the
relatively frequently used or more important elements in turnarounds.
Pradip Khandwala conducted a study of 10 Indian turnaround attempts
(some were more successful than others). He analyzed the cases in terms of
10 categories of turnaround action. These included both internal and external
focus actions. The internal focus actions were: Top management changes,
credibility building actions by the new management, initial attempts by the
new management to control finances and operations, mobilization of the
staff for turnaround, coordination of activities, quick payoffs projects in
various functional areas and quick cost reduction. The external focus actions
were: negotiation of support of outside stakeholders and neutralization of
external pressures, revenue generation and asset liquidation for generating
cash.
Later, he reported a study of 42 ‘complete’ turnarounds and 23 ‘break-even’
turnarounds from all over the world. He utilized eight major categories of
turnaround actions for analyzing each of these turnarounds. These were:
personnel changes, diagnosing and troubleshooting, stakeholder or people
management, operations management, management systems and structure,
financial management, strategic management, and miscellaneous. But several
of these major categories included subcategories. The largest category with
13-sub categories was stakeholder or people management. The sub-categories
were: credibility-building actions of management; securing stakeholders’
support; increased training of managers and staff; public articulation by
management of mission, goals, etc.; management communicating with
staff, lower level managers, etc. incentives, motivating, grievance redressal;
44
example setting by top managers; disciplining; and better organizational Types of Change
integration through participative management, emphasis on core value, etc.
Operations management included five categories: significant retrenchment,
other cost reduction measures, plant modernization, retooling and
reorganization for greater efficiency, quality, productivity, other efficiency,
quality, productivity enhancing action, and marketing-relating actions. Two
areas had three subcategores apiece, namely, management systems and
structure, and strategic management. Personnel changes, diagnosing and
troubleshooting, and financial management has two sub-categories each. In
all there were 27 subcategories and each turnaround case was analyzed in
terms of the sub-categories utilized in the turnaround.
When the 42 turnarounds were scored on the usage of these 27 subcategories,
an interesting insight emerged. There were six turnaround elements that
were used by 60 percent or more turnarounds. These Khandwalla called
foundational turnaround actions, restructuring, cost reduction measures
(other than retrenchment), and plant modernization for greater productivity,
efficiency, qualtiy, etc. Seven other elements had many linkages to
other elements (as measured by number of significant correlations), so
that a change in one could trigger changes in several other turnaround
elements. Khandwalla called them strategic elements. These were use of
staff motivational devices such as incentives, garnering the support of
stakeholders, participation of lower level managers in turnaround related
diagnosing and problem solving, increased HRD, formal diagnostic work,
mass layoffs, and creation of organization-wide consensus on core values
and required changes. Turnaround resembled each other because of reliance
on ‘foundational’ elements; they differed because of differential resort to
‘strategic’ elements.
Scholars who have studied turnarounds have come form many different
disciplines. Those with a strong strategic management orientation have
tended to use turnaround categories popular in their field, such as acquisitions,
diversification, plant expansion, R&D, new product development, and the
like. Those with a finance/economic background have tended to utilize
those variables for which secondary published data are readily available,
such as the PIMS database or the Disclosure Worldscope database. Those
with a strong organizational behavior background have tended to include
a number of ‘people management’ variables related to organizational
mobilization, leadership, communications, incentives, conflict resolution,
etc. Those with a strong organization theory background tend to include
mechanisms for coping with uncertainty such as forecasting, planning,
and MIS; mechanism that facilitate the carrying on of a variety of tasks
such as delegation of authority and various functional departments and
mechanisms of coordinating and inter-departmental collaboration. As of
now it is difficult to separate the wheat from the chaff. One thing is certain:
turnaround requires the taking of many different actions.
2.7.2 Process Models of Turnaround Management
Grinyer and McKiernan: “the process of inducing major and sustained
improvements in companies that are stagnating is of fundamental and lasting

45
Understanding Change importance’, so opined two Brietish Peters, Grinyer and McKiernan, they
studied 25 UK cases of ‘sharpbending’ that is, companies that underwent
transitions to much higher performance. Although sharp benders may not
all be turnarounds form decline, the processual insights of the study can be
illuminating for turnarounds. Accoriding to their model, sharp-bending seems
to begin with a dramatic crisis, a situation trigged by internal dissatisfaction
over the gap between corporate aspirations and realized performance. This
gap may arise on account of any of several internal or external factors.
Next, the organizations may follow a widening sequence of trying-out
options that can get results. Initially, it may seek to analyze function-wise
the operational problems and then launch a cost-cutting programme. If this
does not achieve desired results, it may then go on to modest changes of a
strategic nature, such as some changes in markets served (but still mostly in
familiar terrains). If these two steps are found inadequate, the organization
may seek radical options such as major changes in technology, markets
served or the distributive chain, and involving investment, acquisitions, or
unfamiliar diversification. This, however, would require the organization
to adopt a new paradigm of beliefs, practices, and methods. For this, the
management may borrow an existing recipe, or learns to change by trial and
error processes. This mindset change may require a new management team.
Diagnostic work may then be initiated, such as analysis of the company’s
position is a work may then be initiated, such as analysis of the company’s
position in a competitive environment.
Declines apparently do not automatically lead to sharp-bending actions.
The latter require triggers. Grinyer and McKiernan found links between
various causes of decline and events triggering sharp-bending changes.
Where the causes of decline were external, such as change in product
technology or arrival of substitute products in the market, the triggering
event to be an intervention by an external institution, such as an involved
financial institution. An existing management tended to respond to marco-
social, environment-included declines (such as from demographic chnges or
changes in income distribution).But interestingly, it had difficulty responding
to decline on account of competitive pressure and seemed to ignore decline
caused by poor quality of management. The response to poor management
seemed to be sharper when there was a change at the helm and/or there was
threat or actual change of ownership. There were same additional findings
that were interesting. Intervention by external institutions, such as the
involved banks or stock market authorities, usually pointed the organization
towards cost cutting, but away from strategic change and service/quality
improvement. Threat or actuality of ownership change too usually pointed
the organization towards cost cutting, but also towards fresh blood in the
board and greater decentralization but with tighter financial control. A new
CEO tended to bring a new version and attitudes, and also tighter control.
It was apparently only when management initiated action on the basis of
a recognition of the problems causing decline that attention was paid to
quality and service.
Some further findings on primary and secondary steps in sharp-bending
were interesting. Apparently, it was the ingress of new functional directors
rather than of a new CEO that triggered a flurry of ‘strategic’ changes such
46
as vigorous extension of markets or greater product differentiation or market Types of Change
segmentation. Also, it triggered improvements in quality and service. The
incoming CEO, however, brought with him or new value and attitudes, and
tended to trigger divestiture. Three other primary steps seemed to trigger
various changes. Diagnostic work related to product market focus seemed
to stimulate a whole lot of ‘strategic’ changes, like acquisitions, exist from
non-core business, greater opportunities, they had no effect on strategic
options. And they did seem to weaken financial controls. Another primary
trigger was decentralization of operating and innovative decisions. These
triggered new investments diversity into new markets, greater utilization
of capacity, rightsizing of the head office, and divestiture to reduce debt.
All in all, and most powerful and pervasive trigger seemed to be diagnostic
work related to product market focus, followed by ingress of new functional
directors, profit incentives, decentralization, and last of all, a new CEO.
Grinyer and McKiernan’s study highlights the useful role of triggers in
helping the organization to do something about decline. It points to phases
in sharp bending. It also highlights the importance of changes in the board
and change or threat of change in ownership as important triggers for
initiating sharp-bending steps. It underlines the importance of strategic
product market analysis as the starting point for widespread sharp-bending
actions, and also the secondary but useful roles of profit incentives, new
functional directors, and decentralization. Their study suggests that it is not
enough to get hold of new CEO; for sharp-bending success he or she must
rebuild the to team, get a diagnosis done of current product market strategy,
get the management to recognize problems, offer incentives, decentralize
and tighten controls.
John Stopford and Charles Baden-Fuller: Stopford and Baden-Fuller
examined the renewal process of six British manufacturing organizations
in disastrous straits. The distinguished between ‘turnaround’, which
they defined as oriented largely to financial solvency and efficiency,
and rejuvenation’, in which system-wide changes in strategy, structure,
management systems and processes culminate in a metamorphoses and
powerful new business capability. The previously limited, hid-bound
organization is replaced by a much more resilient, distinctive organisation.
They highlighted the importance for this metaphorsis of a challenge
initially posed by the CEO and his definition of the programme to be
solved, the choice of the competitive battleground, the breaking down of
earlier organizational rigidities, new skills, experimentation innovation
and learning. Rejuventation is a three-stage process which begins with
reduction in the company’s scope of activities (downscoping) to what it
can complete in. The CEO’s belief in the new opportunities that could be
available by the organization determines the scope influence the focus of
change. The next state is acquisition of skills and information to speed up
learning in the organization, characterized by questioning, experiment and
innovation. The final state is recompilation of business, that is, enlargement
of the company’s scope.
During these stages, managers ask a lot of new questions, find out what they
do not know, go about plugging gaps in their knowledge, and in the process
47
Understanding Change uncover many unforeseen opportunities. It is in pursuing these opportunities
that the organization invests in new approaches, metamorphoses and
diversifies (see Box 1).
Box 1
Triggers to Turnaround Action, Strategic Direction, and Focus of change
at Two British Companies
John Stopford and Charles Baden-Fuller examined the relationship be-
tween decline, triggers to turnaround action, strategic duration, and focus
of change. Two British cases, Hotpoint, a large manufacturer of white
goods and a GE subsidiary, with a turnover of $ 272 millions in 1988,
and Richardson Sheffield, a producer of cutlery with an annual turnover
of $ 15 millions, illustrate these linkages. At Hotpoint, the triggers for
turnaround action were a new CEO (Chaim Schreiber), completion form
Italian rivals, especially Zanussi, and substantial losses. Schreiber engi-
neered a complete with the past in one respect. He apparently disliked
conventional marketing and got rid of these marketing department within
moth of taking charge. Nor did he like closely defined jobs, a tall hierar-
chy, or memos-he refused to read them. He believed in person-to-person
talk. And he coached his team in what had to be done in simple terms.
Schreiber gave a strategic direction to Hotpoint to dominate the UK white
goods market, and get out of exporting. He got the organization to focus
on restructuring (flatter, decentralized organization), larger production fa-
cilities, improving productivity and production flexibility, and better mar-
keting (better after-sales service an product reliability) Whole enlarging
production facilities, he bought some of the products form Zanussi, which
made his staff aware of the quality gap between Zanussi and Hotpoint
products.
In the case of Richardson, the triggers to turnaround action were appar-
ently different. Unlike Hotpoint, the main trigger was not a new CEO
but the CEO’s realization that Japan led in progress improvement and his
conviction that the Japanese challenges had to be met. That is, the stra-
tegic direction was product leadership conferring investments in process
improvements. He got the organization to focus on improving grinding
technology. Later, he took up the challenge posed by Sears Roebuck, a
customer, to produce a knife that needed no sharpening and a ‘laser’ knife
was produced. The CEO also got Richardson to focus on marketing. One
major change Richardson made was in moving from piecework (because
it created headaches in quality, supervision, overheads, and disputes) to
an hourly wages system. Richardson also added new products. Later,
Richardson was taken over by Australian interests which added financial
strength that enable Richardson to go global.

Donald Bibeault: Several writers have tried to study the sequence of steps
through which a turnaround proceeds. The study by Donald Bibeault,
turnaround practitioner and scholar, of 81 turnarounds led him to identify
five stages of turnaround. According to him, generally the first crucial stage
of step is that of the moment of truth and of a change at the top, followed by
48
an evaluation, an emergency, and a stabilization of the situation, and lastly, a Types of Change
return to normal growth. The moment of truth dawns when people in power
(generally the board) decide that something needs to be done, the existing
top management may not be able to do it, and therefore a new helmsman
is needed. Change of management may not, however, occur if the cause of
decline is identified as clearly external. And even if the trouble is internal,
the CEO may not be replaced if he or she has strong ownership stake in
the company-some other top executives may be replaced, usually the top
operating offices. The new leader is likely to be an outsider if the problems
are really tough and largely internal, for an outsider, untainted by failure, is
likely to be more objective and have greater credibility than an insider who
has been part of team that wrecked the organization. An outsider can also be
a more ruthless hatched man for the owners.
In the evaluation stage the focus is on the liability of the company and
outlining of a turnaround priorities. This usually follows, at least in the
US, some suave chest thumping the scapegoating by the new chief to
show that he or she means business and that the actions are rational in the
circumstances. Evaluatin work is essential when the new chief is an outsider.
It is also good for credibility. But it needs to be fairly is an outsider. It is also
good for credibility. But it needs to be failrly quick-time is of the essence.
The evaluation consists of the identification of short-term and long-term,
severe and marginal problems. Some crucial judgements need to be made:
Which business segments of the company are viable and which are not?
Do any of the company’s products have or can have, with suitable action a
competitive advantage in the market place that can yield profit? Some good
brainstorming can yield several good solutions, and in the initial period of
the turnaround the realistic target is to solve 80 per cent of the relatively
easily solvable problems rather than get bogged down with 20 percent more
intractable problems. An action plan is preferable to fire-fighting actions,
and an important part of the action plan may be to staunch the negative cash
flow. As important as the action plan is its effective communication-upwards
to the board for approval, possibly also to other stakeholders like lenders,
and downloads to the management team. A presentation to the management
team hopefully resulting in a consensus is desirable.
The next is the fire alarms stage of emergency, and stringent cash controls are
imposed to dowse the flames. This may be accompanied by postponement of
long-term expenditure, downsizing, and borrowing. Divestiture of loosing
business may follow.
After losses are sharply out comes the stabilization or settling down phase,
which means seeking an acceptable rate of return. Profitability takes priority
over cash flow, focus shifts to improving operations (and this means a
lot of analysis), and to strategic refocusing. The emphasis shifts to core
businesses, that is, business the company knows well, and to making them
more profitable, and the best managers may be assigned the task. Also,
management systems get renovated, especially control systems.
Finally, in the ‘reposturing’ stage, the company initiates a planned exit
from unprofitable or futureless business and entry into high-potential

49
Understanding Change businesses. This often means divestitures balanced by acquisitions, possibly
diversification. The emphasis is means divestitures balanced by acquisitions,
possibly diversification. The emphasis is on growth and development
rather than retrenchment, and stronger financial evaluation system. Is
the turnaround now complete? Yes, says Bibeault, provided that besides
generating profits, the company that rebuilt its position in the market place,
made the right strategic moves and motivated its staff the turnaround cycle.
Bibeault’s stage model of turnaround was not derived from data on the
81 turnarounds he studied. It is, therefore, a plausible prescriptive model.
It sounds reasonable until one starts questioning its premises. What if, in
a society, most privately owned enterprises, even large ones, are owner
managed, as is the case with economies in which business groups own,
control, and mange the enterprises in their stable (a fairly typical situation
in many Asian countries)? What then happens vis-à-vis change in ‘top
management’ if an enterprise decline? If in a society there are legal or social
hurdles to downsizing or to divestiture or to acquiring businesses freely,
what happens to the stages of emergency, stabilization, and reposturing? It
is not as if turnarounds do not happen in these societies. But the mechanics
may be rather different, and so may the stages.
2.7.3 Types of Turnaround
Turnaround types are distinctives configuration and turnaround
elements. Typology are useful in various ways. They help us conceive
multidimensional, internally tightly linked phenomina such as species of
plant, insect, or animal life, types of political and economic systems, and
types of organization. Once we have a useful typology, the working of each
type can be examined under a microscope, so to speak, to understand
what holds its various elements together, and how they interact to enable
the type to function. A typology also helps us think about the circumstances
in which each type evolves and the consequences of its existence. This
knowledge can help us modify if approximately. This is true of turnaround
types. A couple of studies illustrate what turnaround types look like.
Hanibrick and Schecter attempted to identify turnaround types or designs in
their study of the turnarounds of 53 US business operating in mature
industrial products industries. These businesses were mostly divisions or
corporations. Through cluster analysis they identified three designs, two of
which they had anticipated and one they had not. The largest cluster, of 28
firms, was the one they had not anticipated, the one they called piecemeal
productivity turnaround. This was relatively high both on capacity utilization
and employee productivity and just about average on 10 other variables.
The second largest of 19 firms labeled selective product/market pruning.
This type of turnaround appeared to be secured by generating cash by
liquidating receivables and inventories. possibly to reduce borrowings,cut
in expenses like marketing, and on higher productivity (either through
incentives or some downsizing), on quality, relatively premium priced
products, even if it is led to lower capacity utilization. suggestive of a niche
positioning. The third cluster, of only six firms, was labeled asset and cost
surgery. This turnaround appeared to be achieved by sharp cuts in R&D,
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divestiture of the older plant and equipment, and reduction in marketing Types of Change
expense, with liquidation of inventories and receivables to release further
cash, and a very strong push indeed for higher productivity (probably
through large downsizing) and capacity utilization, that is, for a low cost
market position. Of Hanibrick and Schecter’s three clusters, only two were
truly multidimensional. These were selective product/market pruning and
asset and cost surgery. Of these two, the asset and cost surgery cluster
had only six out of 53 business. The only multidimensional cluster of
note was selective product/market pruning, and this may therefore be an
‘archetypical’ turnaround design for mature industrial products business in
the US.
Pradip Khandwalla divided 42 ‘complete’ turnarounds from several
countries into two roughly equal groups of surgical turnarounds, involving
substantial layoffs, and non-surgical turnarounds, involving virtually no
layoffs. Through cluster analysis he identified two sub-types of non-surgical
turnarounds. The two surgical subtypes were ‘surgical reconstructive’
and ‘surgical productivity/innovation orientation’. The two non-surgical
sub-types were ‘non-surgical innovation orientation’ and ‘non-surgical
transformation’.
The surgical reconstructive seemed to be the classic, slash-and burn
tumaround, involving managerial overhaul, mass layoffs, divestiture,
restructuring (decentralized), sharper accountability, other structural
changes, a marketing push, and product mix changes (diversification, product
line rationalization, capacity expansion, etc.). The surgical productivity/
innovation orientation turnaround also involved mass layoffs, managerial
changes, product mix changes, and marketing push, but it was much more
comprehensive, with a strong productivity and innovation orientation. It
resorted to giving incentives to staff and motivating them to contribute to
turnaround, disciplining reluctant or non-performing staff, new product
development, several ways of cutting (beyond mass layoffs), a strong push
for operational excellence through borrowings and equity, often to fund
modernization, diversification and expansion.
The first sub-type mostly chopped away what was thought to be malfunctioning,
mended the sorry financials, restructured, but did precious little to build up the
productive and innovative capability of the organization; the second invested
in a strong operational and strategic platform for further growth.
The non-surgical innovation sub-types invested relatively heavily in changes
at the top, innovation and product development, product mix changes,
marketing push and cost reduction (without resorting to mass layoffs). The
most compressive the best performing of all four subtypes was the non-
surgical transformation turnaround. It developed as many as 14 turnaround
elements (versus five by the non-surgical innovative, six by the surgical
reconstructive, and 11 by the surgical productivity/innovation turnarounds).
‘The non-surgical transformation was a highly participatory turnaround in
which a determined effort was made to involve both the internal and the
external stakeholders in designing as well as implementing the turnaround.
There was also considerable effort at expert diagnosis of the organization’s
51
Understanding Change of various management systems, and emphasis on core valued. It did not
neglect changes at the top, product mix changes, cost reduction, marketing
push, productivity push, etc. that are foundational to most turnarounds, but it
went further than any other sub-type in creating a participatory revolution in
the functioning of the organization. In several ways it was prolific in its use
of what John Stopford and Charles Baden-Fuller described as rejuvenation
processes.
2.7.4 Turnaround Performance
Several studies shed light on what makes for turnaround success. In several
studies insights were gained by comparing sick companies that were turned
around with those that could not recover or recover as well. Let us look at
some of them.
Schendel and Patton did a study of 36 pairs of US manufacturing firms
in 20 different industries. In each pair, one firm had experienced a relative
decline and then relative recovery and the other from the same broad
industry had experienced decline, but no revival. While the turn around
firms reported lower income and sales rates of change in the decline phase,
an also lower change in several efficiency and profitability ratios compared
to the non-turnaround firms, the figures were completely reversed in the
turnaround phase. The wide range of variables of which turned around firms
were superior, compared with both their decline phases and also with the
non-turnaround phase. The wide range of variables for which turned around
firms were superior, compared with both their decline phases and also with
non-turnaround group, suggests that the turnaround firms employed a multi-
pronged strategy for turnaround that involved higher rates of modernization,
better use of equipment, greater sales productivity, better cost control, better
use of working capital, and better on sales.
Pradip Khandwalla did a comparative study of five relatively successful
Indian turnarounds and five relatively unsuccessful turnarounds broadly
from the same industries. The firms were medium sized. To analyze the
cases he used 10 categories of turnaround action. There were six categories
of action in which the number of actions in which the number of actions
take by the successes far outnumbered the number of action taken by the
relative failures. These were: initial control (21 actions versus three), quick
pay-off projects and actions (30 versus 15) , quick cost reduction (25 versus
11 ), revenue generation(27 versus nine), organizational mobilization (20
versus nine), and internal coordination(nine versus zero). Three categories
did not differentiate significantly between the relative successes and the
relative failures, namely changes in top management (all 10 firms had
such changes), initial credibility building actions, and negotiation of
outside support and pressure neutralization. Neither group tried the asset
liquidation route in a big way. Successful turnaround seemed to result from
a new management seizing control over the finances and operations of the
firm, hustling in numerous ways, some large, many small, to cut costs,
boost revenues, and improve operations (quality, productivity, cleanliness,
etc.) mobilizing the managers as well as the staff for turnaround through
communications, briefings, brain storming meetings, and task forces, and

52
ensuring originated responses through committees and periodic reviews. In Types of Change
short, success came from a highly proactive, opportunistic and participatory
management of turnaround.
In his study of 42 turnarounds from different countries, drew out two
sub-samples. One was of 18 fast turnarounds and the other of 20 slower
turnarounds.
When their early, middle and final phase actions were compared, some
important differences were noted. In the initial phase, fast turnarounds
tended to engage far more in diagnostic activities than slower turnarounds.
They also tried harder at getting the support of various stakeholders. And
they were more vigorous in taking market related and management control
enhancing actions. Thus, fast trackers got going on a number of fronts while
the slow trackers tarried.
In the middle phase, fast turnarounds were much more likely to use
incentives and motivation than slower turn arounds. They were also likely
to use participative management, an emphasis on core values, and other
modes of creating organizational cohesion for turnaround, as well as attempt
more vigorously to increase efficiency, quality, and productivity(other than
through modernization and automation). In the middle phase, too, the fast
trackers acted on more fronts than slow trackers.
Fast trackers tended to pay much greater initial attention to diagnosing
the organization’s problems and mobilizing the internal and external
stakeholders for turnaround than slow trackers, and were much more likely
to seize control and push for larger sales early in the game. They also tended
to push harder and earlier for operational excellence than the slow trackers,
and that, too, without slackening the effort at consensus building for
turnaround. It is possible that attacking many fronts vigorously led to a
faster turnaround.
An interesting point in this Khandwatia study was that while the non-
surgical turnarounds a group outperformed the surgical turnaround group
both as to extent and speed of turnaround one surgical sub-type the surgical
productivity/innovation turnaround --outperformed one non-surgical sub-
type, the non-surgical innovation sub-type. This suggests that mere presence
or absence or surgery is not decisive, though the general advantage may
lie with turnarounds without mass layoffs. What else goes with surgery
or its absence- in other words, synergy - can make a large difference to
performance.
What do we make of the scholarly empirical work on turnarounds? As is well
known, pundits seldom agree on anything. and cumulation of knowledge in
the human sciences is impeded by different research approaches, samples,
variables examined and their operationalization, and interpretation of the
findings. Turnaround pundits are no renegades to their race. Nonetheless
some inferences, at least at a tentative level, are possible.
As somebody put it, the eye altering all. Turnarounds to yield rich fresh
insights when the perspective is altered. When economists and finance
people look at turnarounds, they see one face of turnarounds, say, of changes
in various financial or cost ratios.
53
Understanding Change When strategic management scholars can turnarounds, they see another
face, say of changes in business focus, growth and competitive strategies
and restructuring for realigning the structure with a changed strategy.
When organizational behavior specialists examine turnarounds, they see
still another face, of changes in leadership style, in HRD, in how ‘people
problem’ of motivation and conflict resolution are tackled. And so on.
What we can conclude is that turnaround is an extraordinarily rich medley
of possible actions. Numerous sets of only partially overlapping variables
can be developed to study it.
However. study after study also indicates that some turnaround actions have
a lot more clout than others in influencing in the form and effectiveness of
turnarounds. Some of these powerful actions are basic to most turnarounds.
They are almost necessary conditions, and include management changes,
especially at the top, and marketing, cost pruning, better operational and
financial control and productivity enhancing actions. However, there may
be no unique way these basic or foundational actions are undertaken; each
management may deploy them in its own distinctive manner. Another
class of powerful actions seems to be those that can be termed ‘strategic’.
Their deployment is optional, but if any is employed, it can catalyze a lot
more turnaround actions. Expert diagnosis seems to have this capacity,
and also many ‘people management’ actions like creating a support base
of stakeholders to get them to pitch in with help, extensive participation of
lower levels in turnaround related decision making, internal communications
to rouse the staff and keep them informed, greater emphasis on HRD
and motivators, etc. Business strategy actions, too, can have large catalytic
capability, such as repositioning the organization’s business, and revamping
its growth and competitive strategies. Restructuring also may be strategic in
its ramifications.
Why do these ‘strategic’ turnaround actions catalyze many other actions?
The reason may be that they touch upon many, possibly all facets of
organizational functioning.
Take expert diagnosis of sickness causes. It can uncover a broad band of
causative factors that encompasses practically all the facets of organizational
functioning thus initialing a broadband remedial action. Similarly, when
turnarounders involve many stakeholders in the turnaround, again a whole
lot of concerns as well as suggestions for improvement are likely to arise,
and acting upon them may have organization-wide repercussions. This is
obviously true of strategic change, for a change in strategic intent needs to
be implemented by a whole host of operational-wide repercussions.
This is obviously true of strategic change, for a change in strategic intent
needs to be implemented by a whole host of operational level changes
in marketing, finance, personnel, and production areas. Restructuring, too,
has many ramifications because it can alter substantially the power and
authority structure in an organization species is our creativity, our nearly
inexhaustible capacity to improvise solutions.. In turnaround situations
this implies the capacity to craft many different turnaround modes even in
very similar context. So long as the mindset of turnaround scholars is to
look for just one kind of turnaround response to a context, we will continue
54
to underestimate turnaround creativity. After all, each successful (or Types of Change
unsuccessful) turnaround is an experiment which can trigger many learning
and changes in other turnarounds. Rather than looking out for unique
context-turnaround modes for each contextual condition, so that they can be
compared and provide a choice to the bewildered turnaround practitioner.
This is a major task.
These choices and possibilities need to be compared with what the
turnarounders think turnaround is all about. Turnarounders tend to see their
situations as hot seats, and indeed they are. But scholars clarify the
numerous sources of crisis and the relationship of these sources with
one another and with consequential actions.
Turnarounders see themselves as energizers par excellence who provide a
gripping vision of the future, who act as bridges to various stakeholders,
who impose on the lesser denizens of their organizations new work
philosophies, who suffuse them with a new purpose and energy,who set
personal example, who ask tough questions to shatter relatively under
examined preconceptions, who take risks, who differentiate between the
organizational deadwood and what can be salvaged, who build teams,
who empower the lesser fry, who assuage the anxiety and insecurity of the
flock, and so on. This is often so, but these dramatic flourishes camouflage
a huge amount of vital backroom work. It is up to scholars to uncover
this work of nitty gritty implementation, local and lower-level initiative
taking, mending of tattered management systems, tactics in the market
place, redefinitions of lower level roles and relationships and soon. Without
this work, turnaround flourishes by the CEO may well resemble vigorous
baton waving by the conductor in front of a drowsy orchestra. And finally,
turnaround and also what can be made to happen. It is the difference
between ‘fix it, sell it, or shoot it’ -the simplistic mantra of Allen Born of
Amax-and the fine-grained constituents of a decline- stemming strategy
and recovery strategy, or the different modes of surgical and non-surgical
turnarounds, or differences between ‘strategic’ and ‘operating’ turnaround
strategic, and the differences between the turnaround stages of arresting
sickness, reorienting, institutionalization, and growth. During turnarounds
restructuring often takes the form of decentralization but with sharper
accountability, divisionalization and change in incentives. This implies that
a lot more managers get the freedom to take initiatives, and these initiates
again may mean organization-wide changes.
We noted earlier some controvery among American scholars whether
‘retrenchment’, meaning mass layoffs, diverstitures, and downscoping,
is a necessary condition for turnaround. Evidence suggests otherwise. In
Khandwalla’s study of42 successful turnarounds, just about half had not
resorted to mass layoffs, and many also had not divested or downscoped.
Even in US studies, asset-cot surgery therefore is likely to be at best
a strategic variable, and a dubiously useful one at that. In Khandwalla’s
study, significant retrenchment was negatively correlated with the rate of
improvement in firm profitability. Thus, firms that retrenched tened to be
slower in turning around than firms that did not. On the other hand, attempts
to increase operational effectiveness, expert diagnosis, attempts to rope
55
Understanding Change in various stakeholders in the turnarounds, improvement of management
systems, and use of motivation aids tended to speed up turnarounds. Thus,
retrenchment may often be a negative strategic action, more a hindrance to
turnaround than help.
The studies also suggest that resorting to many, diverse actions rather than just
a few makes turnaround success more probable. That is to say, the turnround
battle usually needs to be fought on many fronts. The greater the recourse to
‘strategic’ turnaround actions, the more action are likely to be catalyzed, and
therefore the more comprehensive tends to be the turnaround effort.
Turnaround tend to be rich not only in terms of variety of actions taken
but also in the variety of process activated. These processes include those
events than can trigger off a strong turnaround, effort, management change
processes, vision building and leadership, problem definition and decision
making processes, intervention process involving outside stakeholder,
rejuvenatory and ,mindset change processes, processes by which the
organization empowers itself with new skills, etc. It is when we see
turnaround actions as part of wider organizational processes that we realize
what a flux a turnaround is, a river in which a large number of currents,
some horizontal, some sideways, some vertical, and some diagonal are at
play, interacting with and influencing one another. These processes are the
stuff of organisational dynamics. Also, these processes cannot be switched
on and off by the people in power. They have momentum and a futurity and
almost inevitably alter the culture organization. Turnaround wisdom lies
substantially in unleashing the creative and germinal processes and snuffing
out the deadlier ones.

2.8 PLANNED CHANGE

The efficiencies of advance technology, the economics of scale and the
benefits of increased managerial control have generated substantial increase
in the productive efficiency of organizations and substantial economic
benefits to the owners of organizations and to the society as a whole. These
economic benefits, it is argued, have been responsible for a general increase
in the affluence, education and personal levels of aspirations. However,
along with positive development, people have argued that these changes also
have brought higher level of stress, lower job satisfaction and sometimes
increase in attrition rate. It is very important to create an understanding of
the process of change and lay a foundation for gaining results which have
least possibilities of negative effects. Thus understanding planned change is
of utmost importance to the students of management.
“I firmly believe that any organization, in order to survive and achieve
success, must have a sound set of beliefs on which it premises all its
policies and actions. Next I believe that the most important single factor
in corporate success is faithful adherence to those beliefs. And, finally I
believe if an organization is to meet the challenge of a changing world, it
must be prepared to change everything about itself except those beliefs as it
moves through corporate life.”
(Thomas Watson, Jr.)
56
“Fools say they learn by experience. I prefer to learn from others experience”. Types of Change

(Bismarck)
“Fortune favors the brave”.
(Terence)
There are some rules that govern the interaction of competitors, the evolution
of complex systems and the behavior of human beings in organizations.
That they are sometimes soft, often derived through observation, usually
followed more by instinct than conscious design, and never wholly
deterministic for any given situation does not mean we cannot base our
actions on them. Indeed it means the opposite. The whole purpose of
strategic management is to have the courage so to do, and thereby to beat
not just competition but evolution itself.
However, to do so means using our heads as well as our hearts, pitting
others’ experience against our hope, and dealing with reality as it is, not as
we wish it were. Such is life for those who would lead.
Leaders are busy for having to deal with the pace of change and intensity
of competition that has been thrust upon us in the last few years. Busy
because they are trying to transform their organization so as to win in this
new, hyperactive world. And, all to many of them busy because they are
frantically searching for ways to maintain the competitive health of their
organizations.
The primitive hunting party like every team and organization ever since,
faced two challenges:
1. How is it going to deal with a hostile environment of animals and
rival hunting parties so as to provide a superior source of food for
itself and its dependents, and ...
2. How was it going to organize its members to do that, and then to
share the results in such a way they would be happy to continue the
partnership?
The first challenge deals with competition in the world external
to an organization, and poses the problem of strategy. The second
deals with organization, and poses the problem of strategy. The
second deals with performance in its internal world, and poses the
problem of integration. The hunting parties that thrived were those
best able to devise solutions to these two problems. Then, over time,
as conditions changes, as the most successful combinations of
hunting parties and family groups grew in size because of their very
success, as new tools were invented and new more sophisticated
methods of hunting and fending of rival grouping were developed,
those burgeoning mini-civilizations faced a third challenge- how to
cope with change. Evolution had done its for them in the past, but
evolution itself implied a huge advantage to a group whose member
were able to take advantage of or, even more advantageous, shape
change better than their rivals. So was added a third challenge to the
list that all organizations share:
57
Understanding Change 3. How is it going to deal with changes in either or both of its external
or internal environments, and so cope with the need to change its
methods of strategy and/or its means of integration?
In reality every organization also faces a fourth, common challenge,
which we didn’t stop to notice because it was self-evident in the
very name of these earliest simplest examples- families and hunting
parties. Why does an organization exist? What are its purposes?
What is it in business for all? And this we call the challenge mission.
So the four, fundamental challenges faced by all organizations are:
•• Mission
•• Competition
•• Performance
•• Change
Now what about the leaders of those early, human organizations-first
the hunting parties, and then the tribes that naturally followed them into
existenceas the advantages of combining them with their associated family
grouping made such ‘societies’ the most successful? Where did they come
from? How did they emerge?
Organizational leadership then is about finding the wisdom and courage to
make the choices that are entailed in answering these four, great questions:
1. Mission: What are we trying to accomplish?
2. Competition: how do we get a competitive edge?
3. Performance: how do we deliver the results?
4. Changes: how do we cope with change?
Grand strategy is simply the name that we give to the all encompassing
discipline that it entails. So grand strategy is an agenda for leadership, not
a recipe for management. It is an agenda with four components but only
one aim; and that aim is to find and keep vital the ultimate competitive
advantage-a superior way of running the organization that ensures mutually
supporting solutions to all challenges, all of the time so that everything is
done and every operating decision is made in a preeminently strategic frame
of mind. Thus, as we shall see, ‘strategic management’, that much overuse
and abused term is simply operational management driven by a deliberately
chosen, explicitly articulated and comprehensively institutionalized grand
strategy, as opposes to being a collection of response to a tactical exigencies
of the moment.

2.9 WORK REDESIGN AS A TECHNIQUE OF

PLANNED ORGANIZATIONAL CHANGE
There are reasons both for optimism and pessimism about the use of
work redesign as a device fix organizational change. When meaningful
improvements in jobs can actually be made and supported over time,
58
their effects can be powerful. Yet significant restructuring of work is very Types of Change
difficult to accomplish, especially under “normal” circumstances when
organizational systems are operating relatively smoothly. Just how feasible
is it to use work redesign as a point or leverage for planned change in
organizations?
Work redesign has some special advantages in dealing with three key
change problems. The first is simply getting behavior to change. Many
change attempts are based on the hope that if people’s attitudes change, or
if they learn better what they are supposed to do and how to do it, or if they
are helped to understand better the non obvious causes of their and others’
behaviour in organizations, then behavioural changes will “naturally”
follow.
Research evidence forces us to be skeptical about such hopes. People
do not always behave consistency with their attitudes or with what they
cognitively “know’’ they should do. People who have high job satisfaction
do not always work hard and effectively. And, in most organizations, vast
amounts of task-relevant knowledge and skills are untapped either because
people choose not to use their talents in organizational work or because they
do not have the opportunity to.
On the other hand, people do perform the tasks they have accepted. How
well they perform them depends on many factors, including how the tasks
are designed. But people perform them. Redesigning jobs, then, is almost
certain to result in changes in the overt behaviour of the people who hold
those jobs. If the changes require people to know more than they now know
then they may become motivated to increase their on-the-job skills. And if
the changes turn out to prompt hard, task-oriented work, the people may over
time develop beliefs and attitudes that support these new work behaviours.
Work redesign, then does not rely on getting beliefs or attitudes or skill
changes first (such as by inducing a worker to “care more” about work
outcomes, as in zero defects programmes) and hoping that such changes
will generalize to work behaviour. Instead, the thrust of the change is to
alter behaviour itself. Attitudes, beliefs, knowledge, and skills will follow
these behavior and gradually become consistent with them.
The second problem of planned change is getting behaviour to stay changes.
After jobs are changed it is difficult for jobholders to slip back into old
ways of behaving. The old ways are just not appropriate for the new tasks.
Moreover, the requirements and reinforcements built into the new tasks
support the new ways of behaving. So one need not worry too much about
the kind of “back-sidings” that occurs so often after training or attitude
change activities, especially those that take place away from the job itself’.
The stimuli that direct and constrain the person’s behaviour are experienced
right on the job, day after day. And once those stimuli have been changed,
they are likely to stay the way until the job is once again redesigned.
The third organizational change problem is getting the changes to
spread to other organizational systems and practices. What happens in
an organization is completely and redundantly determined. A change in
any single organizational system or practice, no matter how competently
59
Understanding Change carried out, cannot be expected to result in a basic reorientation of how
an organization operates. If overall organizational change is desired, then
eventually the initial changes must spread to and affect other structures,
systems and practices.
Changes in jobs invariably place strains on other aspects of the organization-
ranging from personnel practices and reward systems to the style of
organizational management. These pressures, followed upwith vigour and
competence, can serve as points of entry for brad-scale organizational
improvements. Even organizational practices that previously may be defied
at all attempts at planned change (such as compensation arrangements or
control systems) may now become amenable to change because everyone
agrees that they need to be changed to fit with the new ways the work is
being done. And behavioural science professionals may find themselves
freed from the old difficulty of selling their wares to skeptical manager who
are not really sure anything is wrong- or, if there is that they want to hear
about it.
Much is required for competent organizational change and for following
up and diffusing changes that are made. There are many more ”change
problems” than the three- getting behavior to change, getting it to stay
changes, and getting the changes to spread- are critical. And for these
problems work redesign has some special advantage in comparison to other
organization development approaches.
2.9.1 Alternative Uses of Work Redesign
Our suggestion work redesign can only occasionally be used to “turn around”
intact work systems could be-taken as an occasion for great pessimism.
Indeed. one conclusion could be that we should give up on job redesign as
a change strategy. This appears to be the view of Dr. Harry Levinson, as
well-known management psychologists, as reported in the New York Times
article reproduced in Exhibit 1.
Exhibit 1.
Giving Up on Redesigning Jobs: One Consultant’s View
If you’re a boss and grumbling employees cause you sleepless nights, for-
get it. That’s the advice of Harry Levinson, a Management psychologist.
Reporting in a recent issue of his Levinson Letter, Dr. Levinson Letter, Dr.
Levinson says that most employees eventually get sick of their jobs and
that there is really nothing anyone can do for them.

60
 Types of Change
“The quality of work life can be improved in small ways. Dr. Levinson
says, “but flexitime, worker participation and improved working condi-
tions don’t change the basic nature of the work. Most work is repetitive,
routinized and boring. No job can be endlessly enriched”.
One of the principle tasks of any good manager, Dr. Levinson advices, is
to help employees “accept the realities of their job limitation”. He cites a
study by Herbert Greenberg, president of the Marketing Research Corpo-
ration, which purporets to show that 80- per cent of all American workers
in every job category have jobs for which they are unsuited…
“They are”, says Dr. Levinson, “simply stuck”. “A good boss”, he con-
tends, “will help such employees reconcile themselves to the fact that they
are stuck”. “But”, he concludes, “boredom is a reason, not an excuse, and
when dissatisfied employees cannot shape up, they must go”.
Lest we be misunderstood, let us emphasize that we do not concur with
what Dr. Levinson seems to be saying - namely, that the cause is hopeless,
that work redesign should be abandoned as a point of leverage for personal
and organizational change. For one thing, sometimes organizational
circumstances are such that it is possible to use work redesign to initiate
substantial changes in work systems.
What, then are the alternatives to using work redesign as an “organization
development” technique? Three possibilities are re-viewed below.
2.9.2 Designing New Organizational Units
The use of work redesign as an organization development and its problems
stems primarily from the difficulty of getting changes in jobs to take root
and prosper in relatively stable, ongoing organizational units.
When, however, new organizations are designed (or when there is a major
reorganization of an existing unit), it is possible to design organisational
systems, structures, and practices from the ground up, and to design them in
a way that supports rather than undermines nontraditional work structures.
The result can be substantial innovations in the design of work that have
powerful and beneficial effects.
At minimum, an organizational structure provides the following:
•• Means for managing organization-environment relations, including
responses to environmental changes (in the labour market, the
competitive environment, or regulatory context).
•• Means for coordinating organizational units and assuring and
appropriate flow of information and influence- both up and down the
organizational hierarchy and laterally across different functional and
substantive areas.
•• Means for supporting and managing the work activities or organization
members providing direction, information, supplies, technical
assistance, and so on, to those who are actually generating and goods
or services that the organization exists to produce.

61
Understanding Change Traditional wisdom about organizational design suggests that the structure
of an organization should be responsive to (1) the imperative of the core
technology of the organization, (2) the demands and opportunities in the
environment (including how stable and predictable the environment is),
and (3) the strategic strategic directions for the organization that have
been selected by top management. Thus, the shape of an organization that
produces inexpensive furniture for a stable mass market using production
line technology would be quite different from that of an organization that
produces hand-crafted custom furniture in response to special customer
orders.
First, the strategy of the organization would be determined by top
management. Based on the properties of the organizational environment,
the position of the organization in its market, and the goals and values
of management, the major aspirations and performance objectives of the
organization as a whole would be specified.
Second, designers would identify those special resources and constraints
in the organizations and its environment that bear on the accomplishment
of these strategic objectives. These might include the availability of special
work technologies, regulatory constraints, the supply of capital, the character
of the labour market, the level of managerial talent available and so on.
Third, explicit consideration would be given to how the work should be
arranged to contribute most directly to the accomplishment of strategic
objectives given any specific resources of the organization (such as a readily
available pool of skilled workers) and any constraints within which it must
operate (that only a single type of technology is viable for the kind of work
that is to be done, for example).
Finally, attention would turn to alternative structures for supporting and
managing key work activities, for coordination and controlling organizational
units, and for managing organization-environment relationship. Decisions
about these matters would follow from, and be responsive to, the three
issues highlighted above: the strategy of the organization, special resources
and constraints, and the design of core work activities.

2.10 CHANGE: THE CHALLENGE OF

TRANSFORMATION
Managing is the name given, in common with many others, to the generalized
version of the management paradigm that is taking place of “Command and
Control” as the new era begins. In a world of increasing uncertainty, change
is a journey without a tangible destination. We know little more about where
it will take us than that, at its end, we will have to be able to go on managing
change better than any of our competitors if we are to survive and prosper
over the long haul. Like a nomadic tribe, the modern corporation maintains
its competitive health internally by the endless renewal of its capabilities,
and externally by continual migration to markets where its capabilities, old
and new, can sustain it. The organization, its competitors and its markets
are in constant flux. The winners are those dynamically able to develop
distinctive capabilities, with special value, to particular parts of the market-
62
 place. Financial performance is the measure of success at doing this at a Types of Change
particular point in time. Sustained financial performance is the measure
of success at doing this at a particular point in time. Sustained financial
performance is the measure of success at doing it over time, i.er. of the
superior ability to change in competitive world. Where the old management
paradigm, “Command and Control”, Was eminently suited to a static world,
the new management paradigm, “Managing Change”, is the destination as
well as the transition process of the transformation projects all of the world’s
business enterprises to undertake, and only a few have rally begun.
Grand strategy is the overarching discipline that deals with defining and
refining the way an organization is managed so as not just to succeed
in the current period, but to maintain its competitive health into the
indefinite future. When faced with massive change in multiple aspects
of the competitive environment the steady, continuous refinement of an
organization’s management paradigm, that typifies the leadership task in
stable times, will not longer suffice. Now the very assumptions on which
the paradigm rests are changing. Now something is transformation – of the
way the organization is managed, of its business processes, of the behavior
of its people, of its use of information technology, of the way it treats all its
stakeholders and of the way it is competed; in other words the development
and adoption of a whole, new, grand strategy suited to a whole, new,
economic order.
The shift from one economic long wave to the next is the definitional at time
of transformation for business. Thus the particular from that grand strategy
takes in a period is businesses transformation. It was seen how, each of
previous times this have happened, there have been equally fundamental
changes, first in the industries that drove the economy, and then in the
business enterprise itself and the way it was managed. One more time a
generation of business leaders face the challenge –to transform the way
their organization are managed, to make them the winners in a new, this
time global, economy.
The Process of Transformation
We start by taking the first two dimensions of competitive health strategy
and integration and use them to define the axes of a two dimensional chart.
Then we imagine ourselves as an organization in trouble without a winning
strategy and in need of a process, for bringing about internal integration. In
other words, we are in the bottom, left-hand corner of the chart, wanting
to get to the top right - which is reached by having a well defined, fully
detailed set of strategies and a well aligned smoothly operating organization
(see Fig.1).
X
STRATEGY

Fig. 1 Process of Transformation

63
Understanding Change The first step up the strategy axis is to define business concept, or Participation
Strategy. This comprises a basic definition of the business and where in the
industry we will participate, i.e. where we’re going to compete. The second
step is to develop an Operating Strategy, or how we’re going to compete,
down to the level of detailed, product/market, functional and geographic
plans. These are not discrete, sequential steps. since what we are practically
capable of doing, or becoming able to do, and where these capabilities
have value, are directly connected, However, we have to start somewhere.
So, , in practice we undertake an interactive process, hypothesizing first a
desired participation strategy based on our aspirations and understanding of
the competition, technology and market place. Next we attempt to develop
an operating strategy that can be demonstrated to the value-creating.
Then, on the basis of this learning, including early experience of product
development and market participation, we adjust both participation and
operating strategies until we have a feasible whole.
Similarly, now looking at the Integration axis there are two steps to the
desired, fully integrated organization. First we must build a Top Team to
exercise leadership and personality the behavior we are going to demand
of the whole organizations. This team may simply be comprised of the
direct reports to the organization leader. More usually it is longer than that,
including the key mangers form the next level of the organization. It is
rare that it numbers less than twelve, and impractical that at least its core
much exceeds forty. The goal in composing it is to include critical mass of
power wielders and opinion leaders needed - first to ensure the credibility
of the team’s pronouncements, and second to bring along the rest of the
organization.
The second step along the Integration axis is to expand the core team to
cover the whole organization and everything that goes on within it, with
particular emphasis on all the aspects of the way people relate to each other
and are managed. As with strategy, in practice this must be an interactive
process since the ideas of the leadership need ultimately to be owned by
everyone if true alignment throughout the organization is to be achieved.
Now we can fill in the lines and define the nine boxes of what has come to
be called the Transformation Matrix (see Fig. 2).
The first thing to recognize about this matrix is that every surviving
organization was at some time in the top right hand corner having achieved
Strategic Integration - a well aligned organization, with a fully detailed,
operating strategy being implemented to deliver fully detailed, operating
strategy being implemented to deliver strategic success. This is a very
important insight for two reasons. The first is externally focused. Every
single one of our surviving competitors was once also in that top right box.
Moreover, if we are in trouble there is a good chance that one of the reasons
is that at least one of those competitors is still there! A healthy respect for
one’s competitors is mandatory to maintaining competitive health.
The second is internally focused, and has two, rather paradoxical parts. It
reminds those of us who are in trouble that just because we’ve got problems
it doesn’t mean we’re failures. We did it right once, we ought to be able to
do it again. But it also requires us to recognize that the biggest barriers to
64
getting it right again is the institutionalized character of the way we got it Types of Change
right before. We are probably in trouble because our success locked us into
“the way we do things around here”. And when the assumptions on which
we’d build that paradigm ceased to be valid, because of shifts in the external
and internal environment, we failed to change with them.

2.11 SUMMARY
In this unit types of changes are explained and a detailed description of
how turnaround management can be applied is given and finally process of
transformation has been explained.

2.12 SELF-ASSESSMENT QUESTIONS

1) Describe different models of change, which focus on the individuals.
2) Explain the ten dimensions which bring about organisational change
through role efficacy.
3) Explain OD as a useful model of change.
4) What is process consultation? Explain.
5) Explain the seven pahses ofwork redesigning, as suggested by Nitish
De.
6) Discuss in detail how turnaround management can be applied for an
organisation.
7) Describe as to how to plan change in an organisation.
8) Explain the phase of transformation in bringing change in the
organisation.

2.13 FURTHER READINGS/REFERENCES

N.A, Flanders pioneered work on change through feedback, reported in his
volume
Analysing Teacher Behaviour (Addison-Wesley, 1970). Udai Pareek
and T.V. Rao have reported results of work done in India in “Behaviour
modification in teachers by using feedback using interaction analysis”
(Indian Educational Review, 197 1,6(2), 1 1-46).
An excellent account of development of achievement motivation in an
Indian town is available in Motivating Economic Achievement (Free Press,
197 1) by D.C.
McClelland and D.C. Winter. Prayag Mehta has described in detail the
work done on Developing achievement motivation in high school boys in
Developing Motivation in Education (NCERT).
Developing role efficacy and other role-related interventions have been
discussed in detail in Udai Pareek’s Making Organisational Roles Effective
(Tata McGraw Hill, 1973).

65
Understanding Change Organization Development by W.L. French and C.H. Bell (Prentice Hll of
India, 1983) is a good elementary book on OD.
Edgar Scheins’ 2-volume edition of Process. Consultation (Addison-Wesley,
1980) is an excellent source on process consultation.
Nitish De’s Alternative Designs of Human Organization (Sage, 1984)
contains. Excellent material on work redesigning in different settings
S. K. Bhattacharyya has done pioneering work in organizational structuring,
some material ofwhich is available in Managing Organizational Change
edited bySomnath Chattopadhyaya and Udai Pareek (Oxford &IBH, 1982),
Chapters 5 and 6. B.L. Maheshwari’s pioneering work in MBO is available
in his Managing by objectives: Concepts, Methods and Experiences (Tata
McGraw-Hill, 1980).
Pradip N. Khandwala (2001) “turnaround excellence”, Response Books.

66
UNIT 3 FACTORS CRITICAL TO CHANGE

Objectives
After studying this unit, you will be able to understand
•• Major factors which are responsible for change.
•• How economic conditions play significant role in changing.
•• How the model of different theorists have changed over times.
Structure
3.1. Introduction
3.2. The Axis of Organizational Change: The Prime Factor
3.3. What Makes Excellent Companies Tick?
3.4. The Emergence of Humanistic Philosophy in Management of Change
and Organizations
3.5. Facilitation of Planned Change
3.6. The “Rational and Natural-System” Models of Organizational
Analysis Related to Change
3.7. Organization Development Action Research and the Intervention
Model
3.8. Summary
3.9. Self-Assessment Questions
3.10. Further Readings/References

3.1 INTRODUCTION
What are successful organizations? In the business world, they have three
characteristics:
•• They are more profitable than their counterparts,
•• They are growing faster than their competitors, and
•• They are recognized as leader of at least some part of their industries.
And, in the workplace context, what are happy people? They too have three
main characteristics:
•• They feel they have significant control over their own lives,
•• They feel they are respected for the contribution they make, and
•• They feel they are contributing to something worth doing.
In the last two decades there has been a change in organizations for some
very good, mutually supporting reasons and the one needs to find ways of
managing, suited to specific, strategic circumstances.
67
Understanding Change In most of those organizations, most of the people haven’t been very happy
much of the time. Yet, by way of contrast, it is a common observation that
the opposite- successful organizations and happy people- tend to go together
most of time. Many of us would sadly claim that there were considerably
more of those successful organizations run by happy people when we started
working than there are today. So what’s gone wrong? What are the reasons?
Are we worse managers than our parents? Have organizations changed?
Or people? Or both. The task somehow becomes more difficult, and the
technique not kept up.
Most. important of all, is there any reason to hope for a renaissance of
management of Managing Change that can create a better world? This is a
question where the rule, and not the exception, is successful organizations
run by happy people; where the goals of organisations inspsire passion
and not problems, where leaders coach and counsel rather than command
and control; and where we know how to sustain these characteristics in
the face of intensive competition and wrenching change, so that future
generations do not have to repeat the pain and suffering being experienced
throughout the world or organizations today. There are: reasons why we live
in difficult times, that there is a discipline- grand strategy--to bring it about.
Grand strategy is therefore about the transformation of management itself.
Its purpose is to find a superior way of managing the ultimate competitive
advantage.

3.2 THE AXIS OF ORGANIZATIONAL

CHANGE: THE PRIME FACTOR
It is clear that any attempt to understand a corporation’s operations must
necessarily involve an in-depth discussion with the Chief Executive who
heads the corporation. It is often said that an organization is a long shadow
of its Chief Executive. However, it is suggested that though the statement
might be somewhat hyperbolic, there is no doubt that -so long as they are in
position - they exert an enormous influence on the strategies, style, values
and objectives of their respective corporations. It was, therefore, essential for
developing understanding about excellence of a company, the exercise must
involve a discussion with the Chief Executives of the selected companies.
While it is true that they provide the strategy for long-term thinking about
the future of the corporation, it is also true that since, in the final analysis,
they are accountable for the performance of their corporations, their ability
to think objectively is often influenced by the various events relating to the
corporation in which they are the prime actors. Asking a Chief Executive
to evaluate the quality of the managerial excellence of his own corporation
is almost like requesting the prime actor in a play to be both the viewer
and the critic! Yet given his level of involvement, the actor can provide an
insighful perspective and thinking about the play which the audience or the
critic may not be able to perceive. This will particularly be the case if he is
a ‘method school’ actor totally immersed in the role, who lives and breathes
the character that he portrays.
Another set of perspective observers about the corporation are its lower
level managers and employees who have greater degree of detachment and,
68
therefore, are able to bring to bear greater objectivity to their assessment. Factors Critical to Change
In this context, depending on the career path of the concerned employee,
he could see the company’s operations through rose-tinted glasses if he is a
successful manager on the make or be a bitteer critic, if he feels or imagines
that the corporation has failed to recognize his talents or misjudged his
contribution The element of bias, therefore, is very real also in lower level
managers’ or employees’ comments, particularly if the concerned manager
or the employee aspires to greater status and recognition.
The customers, suppliers, distributors and dealers are the most unbiased
assessors of a company which deals with them extensively. A customer
who buys - and continues to by - the product of a company, particularly
non-consumer goods, has deep understanding of the managerial process
in the operations of the suppliers corporation. Similarly, suppliers to these
companies often have understanding and insights not only about the product
and managerial processes, but also about the nature, strategies and values of
such companies which are truly unique. Perhaps the quality and the depth of
their observations are derived from the fact that they also supply goods and
services to the competitors of the company.
The analogy is also applicable in relation to dealers and distributors of the
products of the company since it is extremely likely that they also deal with
the products of the company’s competitors. In some cases, they are often
cynical in viewing the managerial effectiveness of the corporation. At other
times, in the case of other companies, their comments often have an element
of admiration bordering an sycophancy.
In a study by S.K. Bhattacharya (1989)of all the available published material
relating to the operations of Reliance appearing in the financial press
were analyzed. Advantage was taken of interviews with several Reliance
dealers, distributors and suppliers in obtaining the required comments,
including their understanding about the managerial strategies, styles and
systems of that company. In the initial stage, several brainstorming sessions
were conducted with the members of the team on the one hand, and with
individual members of the advisory committee on the other, to obtain a
feel for the various factors which contribute to a corporations’s excellent
managerial performance. A search of published material was also conducted
to benefit from the thinking reflected in the research experience in this regard.
However, most of the conclusions turned around somewhat generalized
aspects of a corporation’s operations in identifying their contributions to
managerial excellence.
Some of these dimensions identified in earlier research publications related
to:
•• Long term corporate objectives;
•• Culture and values;
•• Management styles;
•• Business strategy;
•• Organizational structure;

69
Understanding Change •• Management systems;
•• Quality of human resources;
•• Working climate; and
•• Leadership
While many of these dimensions appeared to be extremely interesting
issues and aspects for conducting in-depth analysis, the fact remains that
they were often not clearly definable (or measureable) and there was no
framework which could weave them into a coherent and consistent fabric of
organizational reality. This difficulty arose out of the inability to put them in
specific forms or issues which could be clearly conveyed to the persons to
be interviewed (without evoking ‘motherhood’ or ‘salute-the-flag’ kind of
the statements often repeated ad nausem in best-seller management books)
or specific questions which could be shared in advance for briefing the
persons to be interviewed.
Further analysis and additional rounds of brainstorming led to the conclusion
that some of the following could be viewed as overarching considerations in
achieving managerial excellence:
1. Corporate Objectives
(a) Corporate objectives that go beyond the conventional
statements of quantified goals like percent growth rate or return
on investment or profitability%
(b) Objectives, encompass a strategic vision of the future
environment
(c) Identify its opportunities-in the marketplace with clarity, and
capitalize on these opportunities effectively and efficiently.
2. Culture and Values
(a) Kinds of values and aspirations that form the guiding force of
the company.
(b) Values relating to high standards of performance and work
ethics reinforced among employees
(c) Rule bound and bureaucratic culture prevails or is it one, where
formalization of procedure is kept to the minimum people
relating a spirit of entrepreneurship and risk taking.
(d) Value of innovation and its incorporation by the managers.
(e) The degree of ‘customer orientation’ in the company and how the
customer orientation is reflected in the company’s operations,
structure and system context.
3. Decision-making and Communication Progress
(a) The extent of delegation and decentralization in the company.
Is delegation encouraged, and does it take place without
interference in the delegated task?

70
 (b) The extent, process and quality of communication among the Factors Critical to Change
managers. What are the formal and informal mechanisms that
result in effective and speedy communications? Value of time
as resource.
Business and Policy Objectives
(a) Are the company’s functional (e.g. finance, personnel, R&D,
etc.), strategies consistent with each other?
(b) The company’s strategic responses to change in the external
environment (especially changes in government policy,
competition and consumer preference) and their success in the
past.
(c) The rate (in terms of numbers) of new product development,
and the time taken.
Work Organization
(a) Structure resulting in clarity of relationships, and simplicity and
ease of management.
(b) Structure allowing for problems solving and entrepreneurship.
Personal (or Human Resources) Management
(a) Promotions and rewards based on considerations of merit or
performance.
(b) Policies the company adopt so as to allow for personal growth
of the employees (job enlargement, job rotation, etc.)
(c) The extent of motivation, and level of morale and commitment
among employees, especially lower level operatives.
(d) The record of the company in managing its industrial relations
situation?
(e) Sense of commitment of employees to achieve the organisational
goal extent it is self-generated or is it reward based?
(f) The ability of the employees to share credit and recognition for
achievement as a group rather than as individuals.
McKinsey, being one of the premier management consulting outfits in the
world, had decided to mount an in house study headed by Thomas Peter in
mid-seventies for identifying factors which contributed to organizational
effectiveness. The notion prevalent at that time was that organizational
effectiveness was basically a function of the three hard Ss, namely Strategy,
Structure and Systems. This was a very conformable situation since all
three were susceptible to change by deliberate or conscious direction by the
top management and could be changed by fiat. However, Factors Critical
to Change the real life experience was that change in strategy, structure
and systems by themselves did not lead to substantive improvement in
organization effectiveness.

71
Understanding Change The McKinsey study attempted to identify those ‘soft’ organizational
dimensions which influence, rather than direct, improvement in
organizational effectiveness. The Waterman, Peters and Philippe study
represented a watershed in thinking about the underlying concepts relating
to organizational effectiveness. The McKinsey 7-S modes developed during
this study identified four new dimensions which equally important in this
context, namely:
•• Superordinate goals;
•• Style;
•• Staff; and
•• Skills.
However, this new type of view of organization not merely represented an
advance in terms of identifying these four dimensions which influenced
organizational effectiveness but, more importantly, put forward the
hypothesis that the interaction of these seven organizational factors, and
the balance achieved between them determine organizational effectiveness.
The 7-S chart graphically demonstrated their interaction and provides us
with an understanding why the requirement of balance between them is so
important and critical. This is so because each of the seven factors affects
or influence the others and, in turn, gets influenced. No one contends that
to be an excellently managed organization, it must attain the highest level
in each of these seven factors, and monitors and directs their interaction
purposively and positively to attain the required level and quality of
organizational effectiveness. The second conclusion was the sharing the
model with the managers to be interviewed in advance by itself would
not be very productive since it is pitched at a level of abstraction higher
than most conceptual understanding of organization. Its best use would,
therefore, be for the use of the members of the study team to keep it in their
minds as a frame of reference (somewhat like a programme in a computer
memory). The comments during the interviews with managers, customers,
dealers suppliers, etc. could then be related to this mental frame of reference
to generate consciously (or eve,, in subliminal fashion!) understanding and
insights which would be invaluable. ‘The ability to evoke and generate
meaningful comment would obviously be a function of the interviewer’s
capability to ask questions which are not directly derived from the 7-S model
but are related to the organization’s operations and history (but for purposes
of subsequent analysis, are susceptible to correlation with the model).

3.3 WHAT MAKES EXCELLENT COMPANIES

TICK?
The publication of Thomas J. Peters and Robert H. Waterman’s book in
Search of Excellence has lead to the evolution of a new cult in management
thinking which seeks to relate all outstanding and excellent management
performance. The perspective nature of the basic principles contributing to
managerial excellence is the cause of uneasiness among the more serious
writers (for example, Danier T. Carroll’s article in Harvard Business Review
72
November-December 1983 issue, “A disappointing search for excellence”, Factors Critical to Change
and comments of many original thinkers (such as Peter Drucker). Given the
nature of motherhood statements that they embody, few writers or analysts
directly challenged them initially. They somehow gave the appearance of
clearly demarcating the true and trodden path for achieving excellence.
However, the feeling persisted that there must be deeper managerial
dimensions to excellence beyond the catch-all prescriptions, though at
that time such insights were not quite available. Notwithstanding Peter
Drucker’s rejection of the Peters Waterman line of thinking, the authors
were able to turn the whole tide of criticism by the neat argument, namely,
that the eight basic findings were not to be treated as principles but as
distilled management wisdom. They were quite right in arguing that there
is no such thing as a surefire and foolproof mechanical prescription which
will work for all companies all the time. Peters and Waterman followed
up with an even more profound simplication that ultimately we must have
a passion for excellence and that the real thing was to have a feel for the
business which could be generated by following the principle of MBWA,
i.e. management-by-walking-around.
The search for organizational effectiveness in the earlier years had focused
on basically three distinct streams of organizational functioning, namely:
•• Strategy;
•• Structure; and
•• Systems
While the diagnostic effort, particularly in terms of analysis and
prescriptions, had traditionally focuses on strategy and structure, it also
embraced recommendations relating to supportive management systems
which would provide a rational and logical process of accomplishing what
was sought to be achieved by changes in structure and strategy. To illustrate,
strategic recommendations relating to product-market realignment and
product positioning was often accompanied by the suggestion that a
properly designed and purposively administered budgeting system (and
related performance monitoring system) be introduced to ensure that the
strategic recommentations were in fact translated in terms of specific action
programmes. Similarly, structural changes which focused on creation
of Strategic Business Units were accompanied by personnel-related
recommendations which sought to identify the attributes of effective
managers who had to operate such a structure, their recruitment, placement,
training, development and appraisal.
While changes in the strategy, structure and systems could be brought
about by management directive - and when necessary, fiats for overcoming
opposition to such changes - it was often evident that after the initial upsurge
in terms of organizational performance, the original momentum was not
maintained or in any case, there rate of progress tended to be sluggish.
In the early seventies, while no significant conclusions had emerged, it
had become evident that there were organizational factors which related
to beliefs, styles, values and culture which subsequently determined the
73
Understanding Change sustenance (of organizational effectiveness. Since they were somewhat
ephemeral of soft (in the sense that they could not be clearly quantified or
measured), why came to be called the ‘soft factors. In contrast, the three
organizational effectiveness determinants identified earlier, namely strategy,
structure and systems, came to be known as the three ‘hard’ factors because
it was possible to change them by deliberate and conscious decision, and
managerial direction.
While it was clear that soft factors centred on people, mushy sentiments
relating to what are usually called the ‘people-related factors’ at an idealized
level, were often of limited practical value in actionable terms as they seldom
went beyond idealistic notions. Also, they rarely permitted the identification
of organizational dimensions which could be pin-pointed as leading to
organizational effectiveness. The continued search for die non-prescriptive
managerial dimensions led tothe understanding that they influenced, shaped
and sustained organisational effectiveness rather than determined it in any
‘cause’ and ‘effect’ sense. To quote the original Business Horizon article
which explored this aspect.
“Business organizations are basically large social structures with diffused
power. Most of the individuals who make them up have different ideas of
what the business ought to be. The few at the top seldom agree entirely on
the goals of their enterprise, let alone on maximization against one goal.
Typically, they will not push their ideas so hard as to destroy the social
structures of the enterprise and their own power base.”
All this leaves the manager in great difficulty. While the research seems valid
and the message of complexity rings true, the most innovative work in the
field is descriptive. The challenge to the manager of how to organize better
his goal is organizational effectiveness. What the researchers are saying is
that the subject is much more complex than any of our best perspective
models allowed for.”
Arising out of this continued search for the newer dimensions or
organizational effectiveness, management thinkers came to the conclusion
that effective organizational changes if really determined by the relationship,
and the balance, between structure, strategy, systems, styles, skills, staff and
super ordinate goals.
The underlying thought if that you have to develop fresh insights
about these organizational dimensions learn a great deal more about
the organizational process which reflects them and most importantly
understand how they interact with each other and the three hard Ss to
influence shape and finally determine organizational effectiveness.
It might be useful to point out some of the basic underlying assumptions
which form the base of the 7-S model. The first and foremost, of course, is
that it goes beyond strategy, structure and systems and pinpoint four other
identifiable organizational elements. It could be argued that no clear cut
lines can be drawn between them but then the model still has the merit
of presenting the reality that organizations are complex forms and that
segmenting the organizational process in specific components and menting
the organizational process in specific components and manageable parts
has distinct benefits in terms of managing and influencing the change in a
74
positive way. Secondly, the model identifies clearly that the elements are Factors Critical to Change
interconnected as variables which determine organizational effectiveness.
Lastly, and more importantly, it tells us that you cannot introduce change
in one area for achieving progress unless, you begin to pay systematic and
conscious attention to the others, and also their interrelationship with the
prime areas of organizational effort (i.e., achievement of superordinate
goal) for achieving better effectiveness.

The new view of organisations, therefore, looks like the following:

Perhaps the most significant point of the diagram is that there is neither a
starting point nor is it a managerial totem pole (to be enshrined in future
corporate folklore) available to evaluate and pronounce which factor is
more important than the others. It leaves things open indicating perhaps
that the area which is relatively more important in a particular organization
is determined by the context of the organization in terms of its business,
market, competition, technology, societal setting (which substantially
influences the social and political variables) and the regulatory environment.
Bhattacharya (1 989) comments that, it was evident that while some of the
Indian subsidiaries; or associate companies of the multinationals abroad
were outstanding in terms of the: process and systems of management, one
could hardly find anything in relation to their operations which could be
termed as ‘core’ or essentially Indian managerial system, values or style.
It is true that the high performers among these multinational corporations
strongly identified themselves with the Indian social cultural environment
and mouduled their core managerial values in Indian terms. The process
was’ - to use a literary analogy - a matter of translation rather than an
original piece of writing. This is not in any way to detract from the excellent
‘translations’ often with the case of Indian actors with substantive Indian
values. The fact remains, however, that their prime values went rarely
beyond the penumbra of the transnation optical vision: Their managerial
sophistication and excellence could often be related to their conforming
to the given managerial values and styles. They often had the external
image of Indian style but the implicit anxiety to conform to the parent
company’s strategies, norms, values and styles was still very real. Perhaps
75
Understanding Change this is inevitable in a professional set-up where a certain amount of mental
detachment, which is correlated to serving a company and the parent group
in the most effective professional manager, overshadows the urge to look at
the corporate operations as an expression of one’s Indian managerial identity.
The result, therefore, has often been that while their published writings
and private professions conformed to Indian values and aspirations, the
impression remained that the companies were Indian economic enterprises
subserving the broader goals of the parent companies. The scratching of
the outer veneer revealed that their managerial-professional identity rarely
attained an entrepreneurial level since it required not only participation
in the risk but also enrtepreneurial actions beyond one’s prescribed job.
This perception persisted even in those cases where the legal and financial
nexus between the parent company abroad and associate: company here
was absent if the company was substantially build up from a initial non-
Indian background and association-particularly in terms of ‘product and
technology association.
In the case of the public sector companies, while the identification with
the social political environment was much stronger, the problem of
entrepreneurial versus managerial dascotomy remained, given the short
tenures of appointment to top management positions. The prospect of career
advancement in other set-ups or in government department also contributed
to such extra-institutional characterists, often reflected in detached
professional or service values in almost impersonal terms. The result often
was that while sporadically personalities like V Krishnamurthy in BHEL or
MK Mathulla in HMT came to build institutions they were often driven by
their own urges and aspirations for achievement rather than organizational
drive solely stemming from a strong desire to develop the enterprise they
served (Bhattacharya, 1980).

3.4 THE EMERGENCE OF HUMANISTIC

PHILOSOPHY IN MANAGEMENT OF
CHANGE AND ORGANIZATIONS
The Hawthorne studies of the late twenties and early thirties raised
management’s awareness of the impact of the human element on
organizational performance. “Human relations” became important both as
a field of academic study and as subject matter in the training of managers.
While the subject of human relations received some attention, it was not
until the late fifties that this became something more than an addition to the
managers’ tool kit. A number of prominent social scientists developed the
theoretical foundations that made human relations a management philosophy
and approach. Their writings struck at the heart of the value orientations
of managers and at the assumptions underlying our organizational models.
Their analysis included not only a criticism of current organizational and
management practices but also recommended an alternative set of values
which were more humanistic in nature. A number of these writings are
considered by some to be classics insofar as they contributed in a major way
to both the theory and the practice of management. While there were many

76
contributors, we will mention only a few of those whose work provided a Factors Critical to Change
springboard for further exploration and experimentation in the field.
Abraham Maslow’s theory of motivation became a platform from which
organizational analysis as well as worker motivation was studied. His concepts
of the “neds hierarchy’ and particularly his notions of self-actualization,
became popular with managers who tried to incorporate them into their
styles of managing and into their approach to organization. Maslow’s theory
was understandable, could be easily translated into organisational terms as a
way to analyze and formulate approaches to motivation and morale and had
the additional advantage of lending itself to the personalization of the work
place. The most significant impact, however, came from the notion of self-
actualization. The idea that each individual strives to reach some ideal point
of achievement to fully realize his or her potential, seemed to strike many
a responsive chord. Some organizations tried to build a structure and a set
of norms which would permit the workplace to provide self-actualizing
opportunities for people organizations.
Building on Maslow’s concepts of organizational models, Chris Argyris
further explored the relationship between the needs of individuals and the
organizational context within which the individuals work. Argyris argued
against much of what was then being attributed to the classical or bureaucratic
model of organization and the classical views of the management process.
He showed that the notions on which the organizational society was build
had inherent contradictions that ran counter to the natural development of
human beings. Further treatment came from Douglas McGregor, who in
1960 wrote The Human Side Of Enterprise. McGregor, like Argyris, built
on Maslow’s theory of motivation. Very briefly, McGregor proposed two
sets of orientations, or values about management, organization and the
work place. On the one hand, he described a set of values, or propositions,
Theory X, that basically represented a negative, nontrusting, economicview
of people and organizations. McGregor’s idea was that if one built an
organization and a management style or theory based upon this view,
what was likely to emerge was a highly bureaucratic organization having
many rules and many procedures. It would incorporate communication
patterns which were essentially downward (and unidirectional) and would
encompass a’managment role which was centered on control. On the other
hand, McGregor proposed an alternative set of propositions, or value,
Theory Y, which took a positive, trusting, more complete view of people
and organizations. Managing under the Theory Y assumptions would
require the integration of individual needs and organizational goals. Under
these conditions, managers would not need to spend so much time on the
control function. In fact, the individuals in the organization would monitor
and control their own performance - i.e., exert “self-control”. The result
would be increased consonance between what individuals wanted from
the job environment and what the organization need to provide for its own
survival. It is easy to see the relationship between McGregor’s orientation
towards management and Maslow’s description of environments in which
individuals can “self-actualize”.
Rensis Likert, building on some of these early notions, noted that the
major building blocks of successful organizational need not be individuals,
77
Understanding Change but could in fact be social organisms, such as the work group. From this
perspective, the organization is viewed as consisting of many social
organism which are lined together by managers (“linking pins”) who play
very special roles in the work groups of which they are members.
Likert’s orientation, like those of his contemporaries, was a view the
organization as a more humanistic social organism than as a bureaucracy
designed to maximize the technical efficiency of human beings. Taken
collectively, these humanistic views reflected a prescriptive (as opposed to
descriptive) orientation toward organization change and development.

3.5 FACILITATION OF PLANNED CHANGE

The facilitation of planned organizational change as a process involving
collaborative relationships between client systems and social sciences
professionals may now be said to have emerged as a recognized through
still precarious activity in human affairs. The action research studies which
provide its first models were undertaken during the Second World War
independently and against the background of distinct traditions in the U.S.
and Britain when conditions of crisis compelled rapid change. Substiquently,
work of this kind has made its appearance in most western and in one or two
eastern European countries, and in developing countries as different as India
and Mexico. After the immediate post-war years came a lull during which
the different norms of the academic and practical worlds were separately
reasserted; but in manifold Prays pressures towards; change continued
to mount and from the late fifties onwards collaborative activities have
grown in frequency while increasing their variety, their depth, their scope
and their duration. Their persistence and elaboration over the past quarter
of this century suggests that they represent a response, however groping,
to a widespread ‘felt need’ in the contemporary world. This need arises
from the continuous presence in the social environment of a more rapid
change-rate stemming from an acceleration of technological innovation
and scientific advance) which has created higher orders of complexity
and interdependence and higher level of uncertainty than have previously
characterized the human condition. These pose new problems of adaptation
for individuals and the organizations through which their relations are
regulated and on which they are dependent. New attitudes and values must
be found; old organizations require to new themselves; new organizational
forms and behaviours have to be brought into being and tested.
One way of attempting to increase adaptive capability under these conditions
is to couple the resources of the social sciences with the competences
already available in organizations. One way of effecting this coupling is
through establishing a collaborative, action-research type relationship
between social scientists outside and independent of the organization and
those inside it who represent its various systems and are directly concerned
with its affairs. In such a relationship joint reponsibility is accepted for
brining about organizational change towards agreed ends identified through
a search process to which each party makes how own contribution, through
all decisions regarding the actual introduction of any change of whatever
character remains strictly with members of the client system. Frequent
78
evaluations must be made both of what is experienced and done so that, on Factors Critical to Change
the one hand a process of social learning can be released in the organization
and, on the other hand, an increase in knowledge be returned to the scientific
community.
These last two aspects are of central importance for even if the available social
sciences resources were the only constraint, the number of organizations
able and willing to enter into through-going engagements of this type must
be limited. Even if not formally researched, every such engagement should
be regarded as a research undertaking in the formal sense, from which
an attempt should be made to secure a ‘multiplier effect’. This effect is
beginning to be brought about in a number of ways. For example, both
the organizations and the social scientists concerned in such progarammes
are getting to know each other within and across national boundaries. The
overlapping informal sets so composed have the properties of a low register
but higher order system capable of influencing neighbouring sets to which
their members also belong. There are now also many more people inside
organizations with varying degrees of social science competence so that
there often exists a third force, an internal as well as an external, resource
group, whose presence can accelerate the rate at which change can take
place.
In the United States the mainstream of work concerned with changing
organizations derives from the field experiments on various aspects of
social change carried out by Kurt Lewin (1951) and his associates during
the last years of his life. These led to a field theory formulation of how to
bring about social change which has affected areas of world far wider than
that with which we are here concerned. It also led through the unexpected
effect of the members of an experimental workshop on community relations
to the discovery of the T-Groups, the innovation of the laboratory method
of training, the concept of the cultural island and the establishment of a
new type of social science institution - the National Training Laboratories
(NTL) (Bradfor, Gibb and Benne, 1964). This development was premised
on the need to abstract the individual from his usual organizational setting
in order to learn experientially about small group processes and himself in
relation to them - in the here and now’. In these respects the method proved
to have great power, but the effects on their organizations of the abstract
members when they returned were negligible; while the effect of returning
on them were often to undo what had been gained. The original model of the
strangers’ human relations training laboratory was not in itself a method of
effecting organizational change. Its transformation into such a method tool
another ten years to discover.
In Britain the counterpart of the Lewin change experiments was the
development in the war-time. Army by a group, most of whom had been at
the pre-war Tavistock Clinic, of a form of operational field psychiatry - a
sort of psychological equivalent of operational research (Rees, 1945). As
the tasks undertaken became more complex psychologists, sociologists and
anthropologists were added to the team. Interdisciplinary collaboration was
achieved in an action frame of reference, and a common set of understanding
developed, based on a shared core value - commitment to the social
79
Understanding Change engangement of social science both as a strategy for advancing the base
off fundamental knowledge arid as a way of enabling the social sciences to
contribute to the important practical affairs of men. ‘The value position was
the same as Lewin’s -though the conceptual background was different - that
of a psychoanalytically oriented, interdisciplinary, social psychiatry rather
than of a social psychology based on field theory.
The second phase in the theme that now unfolds covers the decade which
elapsed between Lewin’s death in 1974 and the fusion which took place
between the training centred laboratory of NTL and the consulting studies
of organizational change demanded in increasing volume towards the need
of the fifties by large-scale science based industries in the United States.
A second trend in work at the Tavistock entailed a shift in the unit of
analysis from the social system to the social-technical system, which in turn
required the replacement of a closed by an open system approach (Emery,
1959; Trist and Bamforth, 1951; Trist et al., 1963). The studies in the British
coal industry, which provided the first detailed empirical evidence of the
superiority of certain forms of work organization over others for the same
technological tasks., led to the concept of the joint optimization of the
technical and social systems as a goal of organizational change and raised
the question of the participation of the social scientists in the design process.
An opportunity for such participation arouse in collaborative work with the
Sarabhai group of companies in India (Rise, 1963). The opening phase of
this project was concerned with the socio technical reorganization of an
automatic weaving shed where Rice became a member of a (spontaneously
formed design team which included the workers as well as the management
and himself.

3.6 THE “RATIONAL AND NATURAL-SYSTEM”

MODELS OF ORGANIZATIONAL ANALYSIS
RELATED TO CHANGE
Alvin W. Gouldner proposes that a major task confronting organizational
analysts is the reconciliation of two major methods for conceiving of how
organizations operate.
The Rational Model of Organizational Analysis
In the rational model, the organization is conceived as an “instrument” -that
is, as rationally conceived means to the realization of expressely announced
group goals. Its structures are understood as tools deliberately established for
the efficient realization of these group purposes. Organizational behaviour
is thus viewed as consciously and rationally administered and changes in
organizational patterns are viewed as planned devices to improve the level
of efficiency. The rational model assumes that decisions are made on the
basis of a rational survey of the situation, utilizing certified knowledge
with a deliberate orientation to an expressly codified legal apparatus. The
focus is, therefore, on the legally prescribed structure - i.e. the formally
“blueprinted” patterns -since these are more largely subject to deliberate
inspection and rational manipulation.
80
This model takes account of departures from rationality but often tends Factors Critical to Change
to assume that these departures derive from random mistakes, due to
ignorance or error in calculation. Fundamentally, the rational model implies
a “mechanical” mode, in that it views the organization as a structure of
manipulable parts, each of which is separately modifiable with a view to
enhancing the efficiency of the whole. Individual organizational elements
are seen as subject to successful and planned modification, enactable by
deliberate decision. The long-range development of the organization as a
whole is; also regarded as a subject to planned control and as capable of
being brought into increasing conformity with explicitly held plans and
goals.
The Natural-System Model of Organizational Analysis
The natural-system model regards the organization as a “natural whole” or
system. The realization of the goals of the system as a whole is but one of
several important needs to which the organization is oriented. Its component
structures are seen as emergent institutions, which can be understood
only in relation to the diverse needs of the total system. The organization,
according to this model, strives to survive and to maintain its equilibrium
and this striving may persist even after its explicitly held goals have been
successfully attained. The strain toward survival may even on occasion
lead to the neglect or distortion of the organization’s goals. Whatever the
66 plans of their creators, organizations, say the natural-system theorists,
become ends in themselves and possess their own distinctive needs which
have to be satisfied. Once established, organizations tend to generate new
ends which the nominal group goals can be pursued.
Organizational structures are viewed as spontaneiously and homeostategically
maintained. Changes in organizational patterns are considered the results of
cumulative, unplanned, adaptive response to threats to the equilibrium of
the system as a whole. Responses to problems are thought of as taking the
form of creatively developed defence mechanism and as being importantly
shaped by shared values which are deeply internalized in the members.
The empirical focus is thus directed to the spontaneously emergent and
normatively sanctioned structures in the organization.
The focus is not on deviations from rationality but, rather, on disruptions of
organizational equilibrium, and particularly on the mechanisms by which
equilibrium is homeostatically maintained. When deviation from planned
purposes are considered, they are viewed not so much as due to ignorance
or error but as arising from constraints imposed by the existent social
structure. In given situations, the ignorance of certain participation may not
be considered injurious but functional to the maintenance of the system’s
equilibrium.
The natural-system model is typically based upon an underlying “organismic”
model which stresses the interdependence of the component parts.
Planned changes are therefore expected to have ramifying consequences
for the whole organizational system. When, as frequently happens, these
consequences are unanticipated, they are usually seen as divergent from
and not as supportive of, the planner’s intentions. Natural-system theories
81
Understanding Change tend to regard the organization as a whole as organically “growing”, with a
“natural history” of its own which is planfully modifiable only at great peril,
if at all. Long-range organizational development is then regarded as an
evolution, conforming to “natural laws” rather than to the planner’s designs.
The Two Models Compared
Needless to say, these two models are ideal types in the sense that few modern
sociologists studying organizations adopt one to the complete exclusion of
the other. Nevertheless, as we have mentioned previously, some socilogists
tend to stress one model more than the other.
Each of these models has certain characteristic strengths and weaknesses.
The rational model, for example, has the undisputable merit of focusing
attention on some of the very patterns which the modern organization shares
with “natural” groups may also affect behaviour within them. The fact is, of
course, that the distinguishing characteristics of a bureaucratic organization
are not its only characteristics: systematic attention must also be directed to
those features of modem organizations, such as the need for loyalty, which
they have in common with other types of group.
The natural-system model, on the other hand, has the merit of focusing
attention on the spontaneous and unplanned (that is, “informal”) patterns
of belief and interaction that arise even within the rationally planned
organization. Often, however, the natural system model tends to neglect the
distinctively rational features of the modern organization.
The Classic Model of Organization Despite the fact that the classical model
of organizational might seem old gasholder or outdated when compared
with some of the behavioural science ideas, it is extremely important
historically and in terms of current practice. Historically, the classical model
is deeply entrenched in our culture. Max Weber’s writing on the structure
of the bureaucracy have a strong parallel to the classical model in terms
of the mechanical approach to the problems of organizational design. And
the work of Frederick Taylor in subdividing tasks through time and motion
studies gave strong impetus to and is based on the “sound principles” of the
classical model. Even today many businessmen adhere to the principle of
the classical model in thinking about organizational issues.
The classical model focuses primarily on the relationship between two
groups - management and the (production) workers. In discussing these two
groups, the classical authors make many assumptions and value judgements
about the individuals. For instance, workers are viewed as instruments,
solely motivated by economic motives, existing to carry out organizational
objectives. Managers, on the other hand, are characterized as rational
omniscient, and possessing outstanding personal qualities such as kindness
and fairness. However, despite there quantities, the manager’s role define
him as having to be firm with workers.
Because of the model’s view of workers as “economic man”, rewards
and punishments to the workers should be economic in nature. An astute
classical manager would give detailed instruction of his subordinates. Then,
according to the model, he must measure or assess exactly what has been
done by the workers and if the employee should be rewarded or punished
for his performance in executing the task.
82
The classical authors recognized that the task assigned to the worker would Factors Critical to Change
often create an inherent conflict for the employee between his personal goals
and those of the organization. Under the model’s assumptions, however, the
workers are expected to accept the superordinate goals of the organization.
The resolution of this conflict and the ensuring acceptance by the worker
of the corporate position were to be resolved by fitting the “right” man into
the “right” job. This fit was to be defined by personal characteristics such as
physical strength, manual dexterity or specific craft skill. Further, in additon
to this fit of the individual and the job skills required for a specific task;,
heavy formalization of procedures was to minimize the potential conflict by
clearly defining what was expected of organization members. This emphasis
on formal organization, formal communications, and formal job and task
descriptions would keep the worker oriented toward the organization’s
goals rather than his personal objectives.
Organizational Patterns: The classic organization resembles the pyramid
shape displayed in Exhibit 1. At the top point of the structure is the
omnipotent manager and the workers. Within this structure, both the chain
of command stipulates that each person in the organization is
Top Managers
(Must Define and Allocate Tasks

Authority
(Communication of Tasks
Responsibility (Execution of Task)

Single
Organizational Goals

Economic Main
(Performance Due to Economic Motives
Exhitit-1

to have only one superior or boss, for according to the classicist it is

impossible for an organization to adapt itself to the complexities of dual
command. Similarly, each member is to have authority delegated to him
which is equal to his responsibility. In the channels for communication,
information is expected to flow downward in accordance with the authority
structure and upward only in relation to the result of task performance.
Organizational States and Process Specialisation.:Within this pyramid
structure, specialisation is major tenet of how tasks are to be assigned.
The principal goal the classical authors were concerned with, apropos
of specialisation, was to divide the task of the organization so that each
individual would have the narrowest task: while at the same time, the total
activities of all individuals would add up to the organization’s superordinate
goals and objectives. This is so because it was assumed that men differ
in capacity and skill can better their individual performance through
specialization, that a man can’t learn everything in a lifetime, and that no
83
Understanding Change individual call perform more than one task at a time. Men were therefore
assigned specialized tasks of a finite nature within their departments. In
turns, the men were expected to become highly skilled at performing that
particular task.
Most of the classical modelists discussed this specializing in terms of
assigning the specific tasks to functional departments ....
Coordination: A highly specialized as this pyramid structure and the
individuals within it appear to be, the classical authors emphasis that the
sum of the individual - tasks would equal the overall organizational goal
indicates their recognition of the need for coordination or integration.
Primarily, the integration of the highly specialized efforts towards the
singular and centrally determined corporate goal was expected to be achieved
because sub goals would add up to the superordinate goal. Any flaws in
this approach would be dealt with through the management hierarchy. In
other words, individuals in the organization’s hierarchy with appropriate
authority are expected to delegate tasks in a manner which will turn out to
be an integrated effort. If this doesn’t work, they are expected to coordinate
subordinate efforts.
The classicists primarily relied on this hierarchy pattern for achieving
integration.
Conflict Resolution. For the most part, the classical authors ignored
the topic of conflict resolution. They believed that the structure they had
designed alleviated the possibility of conflict within the organization.
The few classical authors who did recognize the need for tools to resolve
intraorganizational conflict relied on the philosophy that conflicting ideas
or actions should be “pushed up the hierarchical pyramid for a decision”.
It was the manager’s responsibility to arbitrate disputes between hostile
subordinates.
Sources of the Classical Model
The classical model is descriptive of the early organizational structure with
which we all are familiar-the church, the military, and the railroads. We can
easily picture the military organization as a pyramid with the commander
in chief at the top and the structure spreading out below down through the
majors, lieutenants, non-commissioned officers, and finally privates. Each
individual reports to one other individual on this execution of a specifically
designed task. And, the cumulative total of these tasks should add up to the
mission of the entire military organization.
Descriptions of the classical model can be found in the works of Fayol
(1916), Koontz and 0’ Donnell(1950s), Newman (1963). Gulick and Urwick
(1937), and Mooney.
While there are a number of variations in their thinking about the model,
depending on their own experience and the time during which they were
writing, the views expressed in this short note were mostly universal as
concern all organizations. That is, while there might be minor variations from
these principles, they were to be rigorously adhered to in all organizations
regardless of task, location, and, to a large extent, size. In essence, applying
84
these principles to the design of organizations facing any and all conditions Factors Critical to Change
would lead to effective permanence of the organization.
The participative model
Whereas the classical model of organization is largely derived form an
analysis of the early experience of practitioners, the participative model is
derived from the work of behavioural scientists. The participative model is
one which many students tend to think of as McGregor’s “Theory Y”. While
the model’s assumptions about individual are closely akin to McGregor’s
thinking about people, the model has assumptions and implications which
are more far-reaching than Theory Y....
The individual
According to the participative authors, the individuals in the organization
is engaged in a multidimensional process of development. Within this
dynamic developmental process, the individual is seen as moving through
the process of maturity. As he matures, this individual’s needs, goals, and
desires tend to move in a specific direction. The individual seeks to be in
a position of relative independence in which he has some level of self-
determination about his future. He begins to seek deeper, more constant,
and increasingly complex interest with which to be challenged. And he also
seeks a greater depth to his behavioural interaction within the organization.
At that same time the individual is experiencing these personal changes,
his process of thinking about the organization and his position within the
organization begin to change. His time perspective begins to become more
long-range in thinking about his goals and growth in the organization. In the
future, he is concerned about having an equal or superordinate position with
respect to his peers. In other words, the maturity process described above
is one in which the individual is seeking self-actualization. The individual
wants control over himself. He is developing a sense of integrity and feeling
of self-worth.
Organizaition States and Processes
According to the participative theorists, the overall objective of the
organization is to achieve a satisfactory integration between the needs and
desires of the members of the organization and the persons functionally
related to it such as consumers, shareholders, and suppliers.
It is assumed that management can make full use of the potential capacities
of its human resources only when each person in the organization is a member
of one or more effectively functioning work group, thus participating in the
overall organizational effort. Further, it is required that these groups have a
high degree of group loyalty, effective skills, and high performance goals.
These groups are to be linked together into an overall organization by means
of people who hold overlapping group membership. Exhibit 2 depicts what
this overlapping organization looks like. The individual who is represented
by an “ X” in the exhibit is referred to as the “linkage pin”.

85
Understanding Change

Work Groups

Linking Pins

Exhibit-II- An Introduction to Organization Models (the linking pin organization)

Under the participative modelists assumptions, the linking pin a key feature
in the organization. He provided a mean of transmitting information and
influence throughout the organization to achieve integration. Formalized
group such adhoc committees and staff groups to meetings across two
levels of the organizations are designed to augment interaction and the flow
of communication and information throughout the organization.
Interaction within the System
The participative organization modelists make a number of assumptions
about interaction within the system both at the level of the individual and in
light of the entire organizational system. At the individual level, integration
of the individual into the entire organizational system is described by the
principle of supportive relationships. The principle states that organizational
interaction should be conducted so that individuals will view their interactions
as supportive. That is, that in all interactions and in all relationships within
the organization, the individuals in light of his background, values, and
expectations will feel these interactions build and maintain his sense of
personal worth and importance. The participative modelists believe that
high managerial goals are a precondition to high subordinate goals. And
that in order of the subordinates to accept these goals without resentment,
the supportive relationships described above should exist. Further, they
believe the maximum participation in decision-making and supportive
behaviour, defined by the model, help establish these high goals and
produce a high level of commitment to the goals achievement. Supportive
behaviour and group decision making, according to the participative model,
contribute to good communication and coordination within the framework
of overlapping groups. The best-performing organizations, according
to this model, are those which motivates the individual to cooperate, not
complete. In achieving this cooperation, the group leader is accountable
and must accept final responsibility for the group performance. However, in
spite of the leader’s responsibility for group performance, he must consider
accepting group decisions with which he does not concur if he feels he
could adversely affect group loyalty by not following the group’s decisions.
Organizational Change
The participative model of organization views change as a total system
condification rather than an atomistic alteration. That is, if a manager
wishes to create a change in the participative organization, he cannot
merely change one small piece of the organization but he has to prepare the
entire organization, since under the model’s linkage pin design the entire
86
organization would be affected. Consequently, according to the participative Factors Critical to Change
designers, change should start by altering the most influential causal variables
affecting what you want to change. Then, there should be systematic plans
prepared to modify all other affected parts of the organization in carefully
coordinated steps.
Conflict Management
The change method described above would involve each individual in
the change process. securing each person’s commitment to the proposed
change, and therefore minimizing the potential for any conflict. In fact,
under the model’s assumptions, all conflict is managed by the participation
of the individuals in joint decision-making period, ideas may be challenged.
But once this group makes a decision, be it a four or five or the collective
“group” of an entire organization the participative theorists see everyone as
committed to the decision since they helped reach that determination. And
if conflict does arise, the participative modelists believe that individuals
who trust each other and are seeking to cooperate with one another will be
able to resolve this conflict.
Source of Data
While the participative mode is closely linked to the thinking of later
researchers like McGregor and Argyris, and to a greater extent on the
work of Rensis Likert and his colleagues at the University of Michigan,
the deepest roots of the participative model are in the work of Kurt Lewin.
While there are some differences in the various researchers point of view,
they all find common ground in their universal applications of model. This
is, irrespective of time, size, location, or nature of business, they all felt that
the participative model is the way in which an organization should and can
be most effectively designed.
The conclusion is based on the researchers’ studies of organizations which
have shown that in the highest performing organization many of the kinds of
behaviour defined and described by the participative modelists are present.
Although it is impossible to review all the research on the participative
model, Exhibit 3 is a flowchart of the general pattern of research findings.
Exhibit 3: An Introduction to Organisational Model's

If a Manger Has:
Well-organized plan of operation
High performance goals
High technical competence
(manages of staff assistants)

And if the Manager Manages Via:

Casual Variables Direct hierarchical Principle of supportive
pressure for results relationships group
including the usual methods contexts and
other practices of of
supervision, and other
principles of systems

87
Understanding Change
And if the Manager Manages Via:
Intervening Variables Less group loyalty Greater group loyalty
Lower performance Higher performance
goals goals
Greater Conflict and Greater cooperation
less cooperation
Less technical More technical
assistance to peers assistance to peers
Greater feeling of Less feeling of
unreasonable pressure unreasonable pressure
Less favorable
attitudes toward More favourable
manager attitudes toward
manager
Lower motivation to
produce Higher motivation to
produce
And His Organization Will Attain:
End-Result Variables Lower sales volume Higher sales volume
Higher sales cost Lower sales cost
Lower quality of Higher quality of
business sold business sold
Lower earnings by High earnings by
salesmen salesmen
Taken from Rensis Likert: The Human Organisation (New York, McGraw Hill, p. 67)

3.7 ORGANIZATION DEVELOPMENT ACTION

RESEARCH AND THE INTERVENTION
MODEL
Here we intend to help faculty and students initiate small-scale intervention
in chosen organizations, on the lines of the standard model. To achieve these
aims, focus is on organization development and action research how the two
relate in interventions. Introspective and projective experiential exercises
to be undertaken to crystallize and make explicit certain assumptions
and value, as well as to provide specific training in needed skills. These
experiences are complemented by a systematic, related set of readings.
Investigation of a Change is an exercise intended to help participant surface
his or her introspections about a personally experienced organizational
change episode, to make them available for examination and comparison
with those of others.
Organization development is a portmanteaux, people-centered approach to
organizational change. The would-be change agent needs to grasp securely
what organization development is - to internalize a working definition - in
88
order to be able to read, understand and draw upon the varied literature Factors Critical to Change
written under the banner.
The intervention Model outlines the standard data-gathering and feel-back
action research model this book advocates for training change agents,
and provides a commentary on its use and development. Given the time it
takes to carry out even a minimum scale intervention, the instructor should
require students to begin drafting their intervention, should be firmed up
and launched as rapidly as possible. In the first few weeks of the course the
there-and-then experiences and models and schemes studied and discussed
should be targeted toward ensuring the viability of these field efforts.
INVESTIGATION OF A CHANGE
Introduction
This exercise is intended to help you improve your grasp, insights and under-
standing concerning the human process by which changes are made by organi-
zations.
Method
Think of specific change carried out in a particular organization you are familiar
with. It is ideal if you are familiar with first hand experience of the change. Try
to find a change which is recent enough to be fresh in your memory. The change
need not be earth shattering or organization-wide. A change affecting a single
group is quite sufficient for the purpose of the exercise.
Your task is (a) to think about the information you have on the change, especially
the human processes by which it was made, i.e., who did what with and/or to
whom, and when, in the course of the change; and (b) to analyze the information
thoroughly. Pay particular attention to:
(i) Causes and perceptions; What were the causes of the change? Who/what
precipitated it? Who perceived what problem?
(ii) Problem solving and decision making process; in what way was the change
decided on and implemented’? Who decided on it? Who was involved,
How/ Why?
(iii) Outcome: Did the attempted change work? Was the change accepted,
resisted or rejected by the people affected by it? How did they react/
behave?
Prepare a careful systematic description of the change, for verbal presentation to
other people, in terms of causes, human processes and outcomes. You should try
to explain why the change attained the level of success or failure it did.

89
Understanding Change Beginning in 1945, for about twenty-five years, we had a macro, business
environment which was essentially stable, where change was mostly
predictable and competition was moderate. There were, of course, business
cycles, but the underlying characteristics of the nature of the market, the
major technologies and the primary sources of competition did not change
very much, or at least not in ways where there wasn’t ample notice of what
was going on. The main industrial drivers of the economy were automobiles,
electrical appliances, aircraft and aviation, chemicals, synthetic fibres,
pharmaceuticals, and radio and television.
The next twenty-five years were very different. Starting with the oil crises,
then the other commodity shocks, resources, including money, became
for the first time, at least in American’s history, scarce and expensive.
Accompanying this we have experienced a rising intensity of competition
as transportation and communication advances have broken down walls
between countries, while deregulation did the same for industries, new
technologies began to make obsolete great tracts of manufacturing assets,
and the widespread, rapid availability of information and training in the
latest techniques equalized the capabilities of competitors.
In the most recent period even business cycles appear to have had a different
complexion, with the up parts being shorter and weaker, and the down parts
longer and more severe. This has led to all sorts of iconoclastic forecasts
of economic doom, and permanent changes in our economic fortunes in a
lower-growth, lower-prosperity future.
However, there is another view, a view which says that what we have
experienced in these two approximately twenty-five years periods, are the
two parts of a long wave - the first from the end of the Second World War
until the early seventies, the expansionary, or inflationary “A” phase; the
second from the early seventies until now, the recessionary, or deflationary
“B” phase - driven by the latest in the burst of technological innovation, and
waves of population growth that have characterized the economic history
of the United States, and other western countries, for the last two hundred
years. In fact the pattern of economic growth since the beginning of the
nineteenth century with a lot of smoothing looks as in Fig.2.

2000

There have been four long waves, each about fifty years in length. The
first began just before and end of the eighteenth century and last is just
about at its end in the middle of the last decade of the twentieth century. A
chronology of these waves along with their principle industries drivers is
shown in Table 1.1.
90
 Tabel 1.1 Mandel's chronology of long waver Factors Critical to Change

Wave Phase Dates Drivers Length (Years)

First A 33 1972-1925 Coal, Canals, Textiles, Wrought Iron

B 22 1825-1847
Second A 27 1847-1874 Railways, Steam Power Gaslighting,
B 19 1874-1893 Smelting Technology
Third A 20 1893-1913 Steel, Petroleum, Telephone
B 26 1913-1939 Automobiles I. Electric Power
Fourth A 35 1939-1974 Automobiles II, Electric
B 1974- Appliances, Aircraft and Aviation,
Chemicals,
Synthetic Fibers,
Pharmaceuticals. Radio and
Television
We can see how the depressions of the 1840s, 1890s and 1930s in the United
States Managing Change marked the end of recessionary, “B” periods of
the first, second and third waves. In each case the industrial drivers of the
ending wave had lost all their ability to propagate economic growth and the
new industries and not yet reached the size of where they could take over.
Much of the Nineties “doom-predicting” has been driven by the simple
expectation that history will repeat itself at the end of the fourth wave,
resulting in another depression. Whether one accepts this pessimistic view
of our short-term prospects or not, the data certainly suggests that we are
fast approaching another inflection point where a “B” phase ends, and, if
the long wave phenomenon repeats itself, an “A” phase begins. This would
accord with what we have recently experienced in the shake-outs arid shifts
in the companies and industries making up our economy.
It would also explain the changing nature of the business cycle. During
growth periods the short-term business cycles, which are oscillations around
the long wave, are inherently more benign (shorter, and less severe) than
in slower times, because of the influence of the underlying direction and
performance of the economy.
The Six Economic Revolutions
1. Aftermath of the Financial Crash in the world’s money centers (New
York, London and Tokyo in particular).
2. Slowdown in Growth (until the next “A” phase really gets going, if it
does).
3. Collapse of communism (but maybe the re-emergence of Fascism);
4. Importance of education (as knowledge becomes the source of value-
added, rather than merely labour).
5. Rise of Communitarian Capitalism (in Germany, Japan and maybe
the rest of the Pacific Rim).
6. Competitive Convergence (of the major economies on the drivers of
future growth).
This presages a world far more complex than the waves experienced by
91
Understanding Change the relatively more separate, national economies of the past two hundred
years. On top of these “revolutions” is the emergence of the Newly
Industrialized Economies (NIEs), such as “the little tigers”’- South Korea,
Hong Kong, Taiwan and Singapore and China, which are making the new
global economy more than just the world of the Traid - Americal, Europe
and Japan. One of the reasons we are not experiencing the depression which
has characterized the ending of previous long waves may be that the NlEs’
strong growth is at least in part making up for the recessionary tendencies
in the developed economies. In this context it is interesting and important to
remember, as the economist recently pointed out, that for most of recorded
history China has had the largest national economy in the world. The last
150 years or so have been a temporary exception, not the historical rule.
In a newly interdependent, genuinely global economy the re-emergence of
China as an economic world power surely has the potential to be the single
most important force of all.
However, regardless of whether there is a recognizable “fifth wave” or not,
the discontinuity in what has been called the “techno economic paradigm”
is really not very different to what has happened in the previous shifts from
one wave to the next. Nor is the recent ferment of activity in the area of
management technique. We can now see that the last twenty years have
formed most of the “B”, or deflationary, phase of the fourth long wave of
American economy beginning, according to Mandel’s Chronology, in 1974.
All four of the “A” phases of previous waves have been relatively simple
(from the management perspective) periods of rapid growth, driven by the
technological innovations clustered toward the end of the preceding “B”
phases. An illustration of this clustering of innovation is shown by the
period 1876- 1903, spaning the end of the second wave, which Mandel put
at 1893. In this twenty-seven year period there were twelve basic inventions
which were a major part of what drove the third wave:
Date
1. The telephone. by Alesander Graham Bell 1876
2. The talking machine, by Thomas A. Edison 1877
3. The electric light. by Edison 1879
4. The gasoline automobile (although the first) 1889
5. The trolley car, by Van Depoele and Sprague 1884-7
6. Photographic film and roll-holder by George Eastman
and Williams H. Walker (followed by transparent film in
1889). 1884
7.
The linotype, by Mergenthaler 1885
8.
The electric reduction furnace, by Cowles. 1885
9.
The recording adding machine. by Burroughs 1888
10.
High frequency wireless. by Marconi 1896
11.
The airplane. by Orville and Wilbur Wright 1903

The first challenge after such a cluster of breakthroughs in one of technical

and manufacturing innovation to turn the new technologies into practice
products and processes. Then follows the entrepreneurial race to build the
capacity of these just invented processes, needed to meet the demand for
those just invented products. Only later, when the first rush to create new
supply to meet new demand is over, does the real, new managerial challenge
appear.
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The “B” phases beginning when the growth of the new industries has begun Factors Critical to Change
to slow, have therefore been typified by advances in management technique,
driven by the need to manage the new technologies and organizations
thrown up by the preceding “A” phases. In periods where growth had slowed
and completion increased, attention has naturally turned to the challenge
of managing the new enterprises more efficiently and effectively to meet
the new pressures on profitability. The last twenty years have been just
like previous “B” phases, characterized by a search for new management
techniques to manage the enterprises created by industries that drove the
growth of the post-Second World War economy. Here we look across
the first three waves, at some of the more significant things each of those
previous “B” phases led us to invent in the area of management, and thus,
very broadly, at how the modern enterprises has evolved over the period
since the industrial revolution.
In the “B” phase of the first wave (1825-1847) we had to learn how to manage
the very first, specialized enterprises of manufacturing, transportation,
distribution and financing. The corporate form itself came into being, and
with it the beginning of the separation of ownership and management. It
was also in this period that the truly revolutionary “American system of
manufacture” (the fabrication and assembly of interchangeable parts) was
introduced. Invented in the small arms industry to lower costs, driven by the
price-based bidding for large contracts for the US Army, it rapidly spread to
other metal goods and then to the machinery to make them.
In the “B” phase of the second wave (1874-1893), it could almost be said
that management itself was invented as the size of the typical industrial
firm rose rapidly, facilitated by the new, manufacturing technology and
transportation infrastructure. Beginning with the railroads the whole
concept of formal organization, with its attending element of functional
specialization, coordinating, planning and control processes, and layers
of middle management, was developed to manage the first, really large,
industrial enterprises the world had ever seen.
The modern corporation as we know it came into being in the third “B”
phase (1913- Managing Change 1939). It encompassed the delineation
of centralized and decentralized roles, the development of line and staff
concepts of authority and, what has been described as the greatest of all
American inventions, training. This was the time when Alfred P. Sloan,
perhaps the leading organizational architect of this third “B” phase, was
using his administrative genius to turn General Motors into the largest
industrial enterprise of its time. The ideas of the product and production
genius Henry Ford build the automotive industry in its first, innovation-
driven growth period. Sloan brought order and ) market focus to the gigantic
new firms it created, and theory over took Ford in the, industry’s second,
consolidation dominated phase.
The profusion, confusion and disillusion of management techniques we have
seen in the last decade-and-a-half is not different in character to what was
going on in earlier “ B phases. In the very first Harvard Business Review, in
October 1922, nine years into the “B” phase of the third wave (and thereby
corresponding , approximately to the stage we were at in the fourth wave in
the mid-Eighties), we find: It is surprising to observe to what extent able,
intelligent businessmen have turned, and are still turning, to the methods
and counsel of the quack with boasted, readymade, dogmatic and infallible
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Understanding Change methods of dissecting the mental and moral qualities of persons in relation
to given task.

3.8 SUMMARY
We have been searching for new answers to new management challenges.
As in previous cycles, this searching has had two quite different kinds of
needs to meet, and if there is a real complaint to be made about the way
this search has been conducted, it is not so much its sometimes misdirected
enthusiasm but that we have not been very good at first separating these
two kinds of needs, and then seeking the right remedies for each The
first need is the problem of managing the giant corporations spawned by
the 1939- 1974 expansionary era as they face the daunting challenge of
adapting themselves to a world where they are no longer the beneficiaries
of sustained, rapid growth. The second is the whole, different set of
challenges arising from the emergence is quite different kinds of companies
in the new industries comprising the economy’s next drivers of growth.
The survivors from the old economy (which, remember, was driven in
large degree by automobiles, electrical appliances, aircraft and aviation,
chemicals, synthetic fibres, pharmaceuticals, and radio and television) will
be those who find new ways of managing to suit the characteristics of their
maturity in a changing world. The winners in the new economy will be those
which first develop appropriate forms of organization and accompanying
management techniques that fit the characteristics of the new technologies,
and the rapidly evolving environment they will have to deal with.

3.9 SELF-ASSESSMENT QUESTIONS

1) Discuss the important factors which are responsible for change.
2) Describe the economic revolutions which have contributed in change.
3) Discuss different models and how they have changed their views over
a period of time.

3.10 FURTHER READINGS/REFERENCES

•• Bhattachary, S.K. (1989) Achieving Managerial Excellence,
MacMillan India Ltd.
•• Emery, F.E. (1959) Characteristics of Socio-Technical Systems,
Tavistock Publication, No. 527.
•• Emery. F.E. and Trist, E.L. (1 965) ‘The casual texture of organizational
environments’, Hum, Rel. Vol. 18, pp.21-32.
•• Khand walla, P.N. (2001 ) Turnaround Excellence Response Books.
•• Rees, J.R. ( 1945) The Shaping of Psychiatry by War Norton.
•• Rice, A.K. (1963) The Enterprise and its Environment, Tavistock
Publications.
•• Trist, E. L. and Barn forth, K. W. (1951 ) Some social and psychological
consequences of the Longwal method of coal-getting, Hum. Rel. Vol.
4, pp. 3-88.
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UNIT 4 ORGANIZATIONAL CULTURE
AND CHANGE

Objectives
After studying this unit, you will be able to understand
•• organizational culture
•• need for indigenous management
•• environmental factors which affect culture
•• how to bring about cultural change
Structure
4.1 Introduction
4.2 A Formal Definition of Organizational Culture
4.3 Organizational Culture and Organizational Change
4.4 The Need for Indigenous Management in Developing Countries
4.5 Characterization of Environments of Developed and Developing
Countries
4.6 The Emergence of Indigenization and the Change Process
4.7 Indigenization and the Complexity of Management of Change
4.8 Strategic Behaviour of Strategic Developmental Organizations
4.9 Closing Cultural Gaps
4.10 Self Assessment Questions
4.11 Further Readings/References

4.1 INTRODUCTION
The culture of the factory is its customary and traditional way of thinking
and of doing things, which is shared to a greater or lesser degree by all
its members, and which new members must learn, and at least partially
accept, in order to be accepted into service in the firm. Culture in this sense
covers a wide range of behaviour the methods of production, job skills
and technical knowledge; attitudes towards discipline and punishment, the
customs and habits of managerial behaviour; the objectives of the concern;
its way of doing business; the methods of payment; the values placed on
different types of work; beliefs in democratic living and joint consultation;
and the less conscious conventions and taboos. Culture is second nature
to those who have been with the firm for some time. Ignorance of culture
marks out the newcomers, while maladjusted members are recognized as
those who reject or are otherwise unable to use the culture of the firm. In
short, the making of relationships, is governed by the extent to which the
individuals concerned have each absorbed the culture of the organization
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Understanding Change so as to be able to operate within the same general code. The culture of
the factory consists of the means or techniques which lie at the disposal of
the individual for handling his relationships, and on which he depends for
making his way among, and with, other members and groups.

4.2 A FORMAL DEFINITION OF

ORGANIZATIONAL CULTURE
According to Schein (1 985) the term “culture” should be reserved for the
deeper level of basic assumptions and beliefs that are shared by members of
an organization, that operate unconsciously, and that define in a basic “taken-
for-granted” fashion an organization’s view of itself and its environment.
These assumptions and beliefs are learned responses to a group’s problems
of survival in its external environment and its problems of internal
integration. They come to be taken for granted because they solve those
problems repeatedly and reliably. This deeper level of assumptions is to be
distinguished from the “artifacts” and “values ‘ that are of manifestations or
surface levels of the culture but not the essence of the culture.
But this definition immediately brings us to a problem. What do we mean
by the word “group” or “organization”, which, by implication, is the locale
of a given culture?
Organizations are open systems in constant interaction with their many
environments, and they consist of many subgroups, occupational units,
hierarchical layers, and geographically dispersed segments. If we are to
locate a given organization’s culture, where do we look, and how general a
concept are we looking for?
Culture should be viewed as a property of an independently defined stable
social unit. That is, if one can demonstrate that a given set of people have
shared a significant, number of important experiences in the process of
solving external and internal problems, one can assume that such common
experiences have led them, over time, to a shared view of the world around
them and their place in it. There has to be enough shared experience to
have led to a shared view, and this shared view has to have worked for long
enough to have come to be taken for granted and to have dropped out of
awareness. Culture, in this sense, is a Iearned product of group experience
and is, therefore, to be found only where there is a definable group with a
significant history.
Whether or not a given organization has a single culture in addition to various
subcultures becomes an empirical question to be answered by locating stable
groups within that company and determining what their shared experience
has been, as well as determining the shared experiences of the members of
the total organization. One may find that there are several cultures operating
within the larger social unit called the company or the organization: a
managerial culture, various occupationally based cultures in functional
units, group cultures based on geographical proximity, worker cultures
based on shared hierarchical experiences, and so on. The organization as
a whole may be found to have an overall culture if that whole organization
has a significant shared history, but we cannot assume the existence of such
96
a culture ahead of time. This concept of culture is rooted more in theories Organizational Culture and
of group dynamics and group growth than in anthropological theories of Change
how large cultures evolve. When we study organizations, we do not have
to decipher a completely strange language or set of customs and mores.
Rather, our problem is distinguished-within a broader host culture-the
unique features of a particular social unit in which we are interested. This
social unit often will have a history that can be deciphered, and the key
actors in the formation of that culture can often be studied, so that we are
not limited, as the anthropologist if often limited, by the lack of historical
data. By looking at evolving social units within a larger host culture, we
also can take advantage of learning theories and develop a dynamic concept
of organizational culture. Culture is learned, evolves with new experiences,
and can be changed if one understands the dynamics of the learning process.
If one is concerned about managing or changing culture, one must look to
what we know about the learning and unlearning of complex beliefs and
assumptions that underlie social behaviour.
The word “culture” can be applied to any size of social unit that has had
the opportunity to learn and stabilize its view of itself and the environment
around it-its basic assumptions. At the broadest level, we have civilizations
and refer to Western or Eastern cultures; at the next level down, we have
countries with sufficient ethnic commonality that we speak of American
culture or Indian culture. But we recognize immediately that within a country
we also have various ethnic groups to which we attribute different cultures.
Even more specific is the level of occupation, profession or occupational
community. If such groups can be defined as stable unit with a shared
history of’ experience, they will have developed their own cultures. Finally,
we get to the level of analysis that is the focus of this unit--organizations.
Within organizations we will find subunits that can be referred to as groups,
and such groups may develop group cultures.
To summarize, at any of these structural levels will mean by “culture”, a
pattern of basic assumptions-invented, discovered, or developed by a given
group as it learns to cope with its problems of external adaptation and
internal integration-that has worked well enough to be considered valid and,
therefore, to be taught to new members as the correct way to perceive, think
and feel in relation to those problems.
Because such assumptions have worked repeatedly, they are likely to be taken
for granted and to have dropped out of awareness. Note that the definition
does not include overt behaviour patterns. Behavioural regularities could
be as much a reflection of the environment as of the culture and should,
therefore, not be a prime basis for defining the culture. Or, to put it another
way, when we observe behaviour regularities, we do not know whether we
are dealing with a cultural artifact or not.
The importance of understanding organizational culture and its contribution
towards malting change relevant and meaning, may lie in several issues.
One needs to care very deeply, first as an individual, second as a member of
whatever kind of team one plays on, and third as a world citizen struggling
to make sense of the times one lives in.

97
Understanding Change First, there is a part of every job where the buck stops right there. And in
that piece of your job you need the insights of grand strategy. All of us face
these four great question. They are inherent certainly to every management
position, and increasingly to every other job in the decentralized, task-
oriented, knowledge-worker world that is emerging as the century draws
to a close. Without a clear, integrating, grand strategy your actions are
bound to be fragmented at best, and at odds with each other at worst. In less
competitive, more stable times maybe it didn’t matter as much, but today it
has become condition for survival, let alone success.
Second, in the complex, interdependent system that is the modem organization
we all need to the aware of our organization’s grand strategy, so that we can
play our role and help others play theirs. Even if we don’t make the ultimate
decisions, we certainly play a part in getting them made for our immediate
unit and increasingly, as various forms of participative management are
more and more widely adopted, for the whole organizations.
Finally, in every age man wants to believe that there is something special
about this particular time, that it is an important moment in history, and that
there is an opportunity to be part of some great event or movement which
will leave its imprint on the history of the human race. Something important,
something special has been going on in every age. Maybe that’s true by
definition - being man’s response to, or attempt, at exploiting the change
that never ceases in our world, in our ideas about it and in our capabilities
for dealing with it. Maybe the real challenge is not so much to try to figure
out how to make our time special, but to find what’s special about our time,
so that we can contribute to it, gain the most from it and above all learn to
manage it so that it doesn’t manage us.
What’s special about our age is, becoming pretty clear and, economically,
there are two parts to it. First we are moving into a genuinely new economic
era. This is a Change: Cross Cultural Experiences discontinuous change that
has taken place three times since the beginning of the industrial revolution
near the end of the eighteenth century. One more time change will do so
not because they go back to what they were doing before things began to
go wrong, but because they find superior, new answers to the four, great
questions of grand strategy suited to their new situation in a new world. The
winners in the new industries will be those who find superior answers to the
same four questions, best suited to the nature of the businesses spawned by
the new technologies.
But most of us won’t work for the relatively small number of glamour
companies that will become the icons of the new economy. What’s more
important for most of us, than that there will be some spectacular winners
that we will all wish we had joined or bought stock in, is that every kind
organization will have to be run in new ways in this new economy if it is to
survive, let alone be successful. These new ways of working, of managing,
and of leading will be very varied, far more so than in the previous era,
because one of the features of the new economy will be extraordinary
diversity, as the strategic value of focus in a huge global market provides
the opportunity for myriad specializations. The scale of the economy is now
the scale of nature. The enormous richness of species that evolution brought
to nature, competition is now bringing to the massive, global economy.
98
But there is also a dark side, for the historical lot of species has been Organizational Culture and
extinction. The evolutionary law that no two species can make their living in Change
the same way in the same environment now also comes into play with all its
full force. The question is: are we just going to await our revolutionary fate,
hope that we have the skills that will be valued and that the organizations
that we are in have the capabilities to survive and succeed? Or are we going
to take control of our own destinies? The promise of grand strategy is that
it provides a way of understanding the task, and a set of tools for tackling it
that will enable those who dare to transform the way they manage, and by
so doing build their piece of one of the winning organizations of the new
economy.
By common observation the industries that have driven the post-war
economy are by and large mature, and are being displaced as the engines
of growth by a whole new set, based on the emerging technologies of, for
example, microelectronics, robotics, biotech, material science, computer
science and telecommunications.
Second, we are moving into a genuinely global economy coupled with a
convergence of attention by all the major economies on this new set of
industries. This is going to mean a gigantic clash between global, corporate
entities as well as between them and government, at the same time as there
is more and more interdependence between nations, and more and more of
a common, global market-place.
Compounding these economic forces we are also facing major cultural
clashes between and within society after society, large and small. At the
national economic level, Western Individualistic Capitalism faces its next
huge challenge, after seeing off socialism, with the rise of Communitarian
Capitalism as it is practiced in the fastest growing countries in the world
along the Pacific Rim. Will this next attempt to put the group before the
individual fare better than socialism? Or will those cultures become more
like the West’s? This ancient struggle between man as an individual and
man a member of a group is also going on within nation after nation,
whether it be the multiple diversities of modem America versus the notion
of an overriding, common nationhood, the religious divisions in Northern
Ireland, the ethnic hostilities in Bosnai, or the tribal ones in Rwanda.
The claim of a few years ago that history had come to an end with the collapse
of Communism, and the apparent vindication of Western Democratic
Capitalism has proved very premature indeed China is the growing example.
The competition between different cultures, different to run economies and
different modes of governance is still very much alive, and growing more,
not less intensive as the world becomes a smaller place.
The transformation that is taking place in the global economy means that
all the assumptions of grand strategy are being thrown up in the air. It is
truly time for ‘back to basics’, but not in the sense of ‘back to what we
were doing’ in easier times. That is the one thing we know won’t work!
There will be new industries, new ways of working, new ways of organizing
enterprises and new ways of managing and, even more important, leading
the people who work in them.
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Understanding Change
4.3 ORGANIZATIONAL CULTURE AND
ORGANIZATIONAL CHANGE
The importance of organizations for man and society can hardly be over-
estimated. From life to death one or other form of organization plays a role in
the life of the individual and impact on societies, nations and communities,
be it political, religious, cultural, educational, judicial, economic, industrial
or sport organizations, etc. Organization is the vehicle through which groups,
the collects the individuals work to achieve their goals, aims and objectives.
Being an age old phenomenon, almost universal in its appearance and
application, there is little doubt that a well led, well organized, well
managed, well planned, well resourced, well monitored organization can be
a powerful tool to improve quality of life or product or process to achieve
excellence, to benchmark, to excel, to develop, to grow, to optimize the
condition of man or to produce and to profit. The opposite however is also
true.
Here we would like to focus on two aspects of organizations in addition to
the pivotal role of leadership namely organizational culture and organization
change as major determents of organizational effectiveness, efficiency,
sustainability and overall success as ‘instruments for development.
Loosely defined an organization is a collectivity where people work together
to achieve fairly specific goals, objectives with a fairly formalized structure
and processes often strongly influenced by environmental factors.
Organizational culture entails all that govern, guide and shape the
organizations people-relationships. organizational change may be defined
as “..... the movement of people from a current state to a defined state,
different, improved and desired new state through a set of planned and
integrated interventions.
With these loose imperfect definitions in mind we would like to focus on
the role of organizational culture and organization change in organizations.
What is clear is that the discussion centers around people, human beings
in a specific social set- up or structure; that it centers around goals and
objectives, that it centers around responsiveness or the lack of it to outside
pressures and forces that influences the activities, relationships, the
commitment of people, the effectiveness and efficiency of the collectivity,
its ability to prosper to make profit or even to survive, whether it adds value
to the human, condition, develop people and communities or whether it
adds to their misery.
Organizational culture could be one of the key ingredients in determining
effectiveness and efficiency in understanding, benchmarking in becoming a
world-class business and organization.
Given the importance of organizational culture it might be worth our while
to consider the factors that have influenced its development.
The Factors that have Influenced Organizational Culture

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History and Ownership Organizational Culture and
Change
The one-person business, The Family business, the small-group entrepreneur
will I determine influence, power, style, due to its centralized ownership.
Size
As the enterprise grows and expands, tight ownership and control may
dwindle and other will start influencing style and culture.
Technology
High cost, high-tech, high touch, fast changing technologies like in
telecommunications might require a more flexible culture than those
technologies that are expensive (machiner) where a more formal, well-
structured culture will be required.
Leadership and Mission
Individuals and their values will impact on the culture of the organization.

Figure 1: The cultural web as instrument in analyzing the elements of the

organization culture
- Stories: What people talk about, what matters, what is defined as
success, failure.
- Routines: What is the normal way of doing things, procedures,
practices.
- Rituals: What does the organization highlight? Long service, quality,
performance, and innovation.
- Symbols: Symbols like office size, type of car.
- Control System: Formal, informal, bureaucratic.
- Orgainzational Structure: Who reports to whom on a formal basis
and who have an informal relationships?
- Power Structures: Who makes the decisions, who influences the
decisions. How. When.
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Understanding Change Need for understanding Organization Culture Research
Organizational culture research predates the “corporate culture boom” of
the past decade. Traditional organization research, often objectivist and
abstract, has proved incapable of providing deep, rich and realistic pictures
of objects of study, and the dominance of qualitative, hypothesis-testing
studies has discouraged alternative approaches. This kind of situation
gives a feel of being put in a straitjacket. One needs to ‘have a more open
and context sensitive approach for implementing change programmes. It
has been often observed and experienced that a type of programme when
implemented in one country leads to huge success and appreciation, but
the same programme falls flat on its face when brought to another country.
Productivity problems of Western society, especially the USA may have
provided a more distinct material base for the exploration of new ideas.
Japanese success appear to have connection with the national ethos of Japan.
The emergence of new forms of organization have also helped to make the
cultural dimension more salient. The developing countries are all the more
required to understand and optimize the cultural trends to reach the goals of
efficiency and effectiveness.

resource management

102
 Organizational Culture and
Since there is evidence that an organization’s culture is a key factor in its Change
success, it is important for the organization to have an appropriate culture
for its context and type of operation. It is to be expected, therefore, that
managers should at times want to change the culture of the organization
with the aim of producing better performance. Culture change may, in
fact, become desirable for a number of reasons. lf the company has grown
very rapidly, the culture which was appropriate when it was smaller may
no longer suit a larger organization. Takeovers, mergers or other forms
of reorganization will also normally require adjustments to the culture,
particularly where there are significant differences between the cultures
of the organizations concerned. Technological changes in production ad
changes in the environment, such as increasing competition, will also have
cultural implication. It is not, therefore, surprising that ‘culture change’
has become a growth industry for management consultants.
It has to be said, however, that changing culture, if it can be done at
all, is a difficult and long-term process. This is not surprising when it is
considered that in most organizations the existing culture is extremely
well embedded. It has usually been set by the original founders and in
many cases developed and reinforced over long periods of years. Even
relatively new organizations will often have absorbed their culture from
forerunners or from organizations with which they feel an affinity or
which they perceive to be similar. Universities founded in the last half of
the twentieth century, for example, have absorbed much of their culture
from their medieval forebears. The way we relate to students and the
commitment to research and scholarship and many of our practices all
derive from this source. It is quite surprising how long some of these
practices have survived, even though of doubtful relevance to modem life.
Despite the difficulties, many companies have made quite significant
changes in culture; how is this done? Cummings and Huse (1989) provide
some practical advice by suggesting a series of stages that must be
considered and appropriately managed:
Clear Strategic Vision: It is important to start a culture change with a
clear view of the direction and purpose of the proposed change. Why is it
necessary to change and where is it hoped to end up? Very often this will
be enshrined in a company ‘mission statement’. This is a statement of the
company’s goals and how it intends to achieve them. It is important that
this should be a clear and precise statement of operationalizable goals, not
just a set of ‘motherhood’ statements, as is often the case in practice. The
importance of the mission statement, from the point of view of culture,
is that it will embody the values which the company leadership espouses,
and thus provides purpose and direction for the cultural change.
Top Management Commitment: It is important that top management
are committed to the change, and are seen to be committed. Culture
change can only be managed from the top down. This is because only
top management has the power to make changes in the values ad deeper
structures of the organization.

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Understanding Change
Symbolic Leadership: Senior managers must behave in ways which are
consistent with the new culture. More than this, it is necessary to do so
with enthusiasm, so that the new culture is communicated through their
actions. Hence the need for real internalized commitment at the top.
Supporting organizational Changes: It is essential to make changes in
the organizational structure, reporting procedures and management styles
to bring them into line with the new culture. It is, for example, impossible
to move towards a culture embodying participation and empowerment
if the organizational systems still require detailed reporting in a strictly
hierarchical line system of management. New organizational procedures
can also be used to make people aware of the changes that are taking place
and encourage the new behaviours which are required.
Change Organizational Membership: Bringing new members into the
organization, who already subscribe to the required organizational values
and practices is a considerable help to the process of change. By the same
token, helping those who do not wish to accept the changes to leave will
also speed the process. (An activity which Cummings and Huse rather
sinisterly refer to as ‘termination of deviants’). One organization we
know of has made the change from being a government funded research
organization to become a commercial consultancy. This entailed a change
of culture from that resembling a university department to a reasonably
aggressive sales-orientated culture. While new mission statements were
issued and considerable restructuring took place, one of the main factors
in the culture change was a deliberate policy of hiring new personnel
with commercial experience and values, coupled with redundancy
programmes which enabled those who disliked the new philosophy to
leave. Changing organizational membership, in this context, does not only
mean hiring and firing. It is possible to change, by a number of means, the
attitudes and beliefs of individuals who remain within the organization.
The most obvious of these is through training and development, but
other techniques include formal communication programmes, use of role
models who display the required new behaviours (often these are provided
by new members hired as part of the change programme), counselling
programmes and participating with organization members in developing
the new culture. Attention to the reinforcement patterns is also important,
to ensure that only the required behaviours are being reinforced, and the
old pattern:; which it is wished to change are extinguished.
Hofstede has suggested that successful culture change needs the joint
action of two parties – a power holder and an expert. These terms are
derived from a German study and are translations of Machtpromotor and
Fachpromotor. In practice the Machtpromotor would normally be the chief
executive or a group of senior managers; the Fachpromotor would be an
outside expert. The expert’s role is to provicle a diagnosis of the existing
culture. An outside expert is needed for this, as it is virtually impossible
for a member of the organization to have a clear and unbiased view of
its culture. Based on this diagnosis, the power holder can then make the
required culture changes part of the organization’s strategy.

104
 Organizational Culture and
By way of summary and in concluding this section it is worsth noting Change
Hofistede’s view of culture change:
‘Although culture is a “soft” characteristic, changing it calls for “hard”
measures. Structural changes may mean closing departments, opening
other departments, merging or splitting activities, or moving people ardor
groups geographically. The general rule is that when people are moved as
individuals, they will adopt the culture of their new environment; when
people are moved as groups, they will bring their culture along. People in
groups have developed, as .part of their culture, ways of interacting which
are quite stable and difficult to change. Changing them means that all
interpersonal relationships have to be renegotiated. However, if new tasks
or a new environment force such a renegotiation there is a good chance
that undesirable aspects of the old culture will be cleaned up. ‘
Source., Peter Makin, Cary Cooper and Charles Cox (1996), “Organisations
and Psychological Contract”, pp. 253-256.

Table 4.1 Key Factors in Cultural Change

Understand the old culture. Managers can’t change their course until
they know where they are.
Encourage change in employees. Reinforce people in changing the old
culture and those with new ideas.
Follow outstanding units. Recognize outstanding units in the organization,
and use them as a model for change.
Don’t impose cultural change. Let employees be involved in finding
their own new approaches to change and an improved culture will emerge.
Lead with a vision. The vision provides a guiding principle for change,
but must be brought into by employees.
Large-scale change takes time. It may take three to five years for
significant, organization-wide cultural change to take effect.
Live the new culture. Top management values, behaviours, and actions
speak louder than words.

Source. Donald R. Brown (1996), An experiential approach to organisation

development, p. 74.
According to K. Harigopal (2001) the following aspects have to be taken
care before proceeding for cultural change:
1. Formulate a clear picture of the firms’s new strategy and of the shared
values, norms, and behaviours needed to make it work.
2. Take a close look at the inner functioning of the organization and
determine if cultural change is necessary.
3. ldentify aspects of the current culture that could still be valid and
other aspects that need to be modified or changed.
4. Identify the depth of cultural change needed.
105
Understanding Change 5. Communicate the change translated into goals, subgoals, activities,
and behaviours.
6. Make changes from top down. The top management’s commitment
must be seen and felt (for example, Donald Kendall, the chief executive
of PepsiCo, is said to have demonstrated the kind of ingenuity and
dedication he expects from his staff by using a snowmobile to get to
work with a blizzard).
7. Involve employees in the change process.
8. Check on the leadership and support processes to overcome anxiety
among managers in giving up their earlier responses (for example,
when PepsiCo changed its culture from passivity to aggressiveness,
the shift was accompanied by supporting changes in reward systems
and interdepartmental relations. A positive and competitive tension
was nurtured among departments).
9. Monitor the progress from time to time; build momentum in terms of
initial success.
10. Defuse resistance. Despite this, expect certain casualties to occur
(for example, some employees may leave the organization and a few
setbacks may occur to the change effort).

4.4 THE NEED FOR INDIGENOUS

MANAGEMENT IN DEVELOPING
COUNTRIES
Organizations are socio-technical systems with specific objectives of
producing goods and services for their clientele. In order to manage such
organizations effectively, it is necessary to understand how these systems
work. Social scientists working in the field of organizational behaviour
have proposed many theories and techniques that have helped management
practitioners not only to understand the complexities of organizational
systems but also to manage them effectively in order to achieve their
production and service objectives.
Most widely dispersed management theories and techniques have their
origin in the Managing Change industrialized countries of the West. Many
organizations in these industrialized countries have benefited from their
prescriptions. As a result, Western management thought and practice have
turned into ‘sacred cows’ for industrial development. Countries in the
developing world are advised, and feel themselves, that they must strive
to adopt Western thought and practices to achieve economic prosperity
within the shortest possible time. Hence many organizational practices and
management training programmes in the developing countries in modem
times are based on ‘an uncritical emulation and extrapolation from the
experiences of the economic growth model of western countries, grossly
disregarding the fundamental differences in socio cultural constraints and
local conditions and circumstances (Sinha and Kao 1988). Uncritical transfer
of management theories and techniques based on Western ideologies and
106
value systems has in many ways contributed to organizational inefficiency Organizational Culture and
and ineffectiveness in the developing country context. Change

Managing oganizations requires a thorough understanding of the dynamic

relationships within the socio-technical system (the internal environment)
and the relationship to the external environment with which the system is
in constant interaction. Since the external environment of organizations in
the developing countries is different from that of the Western industrialized
countries, management theories and practices developed in the developed
country context may have only limited applicability in the developing
world. If one accepts the above premise, it becomes clear that there is a
need to develop indigenous management theories and practices for use in
the developing country context.
The need For indigenous management
Every organization must deal with the management of its internal and
external environments, i.e. the management of the people and technology
within the organization as well as the management of relations with the
environment external to or outside the organization.
Every organization has the basic purpose of achieving two sets of objectives
with respect to the management of its human resources. The first has to
do with improving the performance of organizational members to deliver
goods and services for which the organization is formed in the first place.
Productivity of a given organization - whether it is measured in terms of
units produced, volume of sales accomplished, quality of services rendered,
amount of profit margin, or cost effectiveness of the operation - is largely
dependent on the performance of organizational members, be they managers
or rank and file workers.
The second set of objectives has to do with developing and maintaining
the human potential that serves as the backbone of the organization. To
survive and to respond to competitive challenges from time to time can only
be sustained and mobilized when the organization has highly competent
and motivated manpower. The effectiveness of the management of an
organization is very much dependent on the nature of the human resources
it possesses. In other words, an effective organization is one that has
members who exhibit high levels of both work-related motivation (job and
organizational commitment) and work performance.
Viewing organizational effectiveness in this way presupposes the existence of
a system of management practice and employee behaviour that is conducive
to high levels of work motivation and performance Such management
practice and employee behaviour within an organization in a major way
results from managerial and employee values, attitudes, and beliefs
regarding work and organizations. Every organization has an internal work
culture of its own which influences the behaviour or practices of both the
management and the workers. The organizational work culture represents
a form of organizational reality that shapes both the micro-level individual
processes (day-to-day practices and behaviours of organizational members)
and macro-level organizational processes (design of organizational structure,
technologies employed and strategic activities).
107
Understanding Change The shared values, beliefs, and norms about the nature of work and
organization, the work culture is constantly influenced by the environment
in which the organization operates. As the survival and growth of an
organization depends on its developing an appropriate corporate culture
that can adequately respond to external environmental forces. As the
effectiveness of an individual depends on how adequately he or she copes
with the surrounding environmental demands, the effectiveness of a it also
depends on how it adapts to its environmental demands by developing
an appropriate corporate culture. In developing the appropriate coping
strategies, it must be sensitive to environmental constraints and opportunities.
Such sensitivity implies identifying and responding to three major aspects
of the environment: (a) economic and technological, (b) political and legal,
and (c) socio-cultural. The economic-technological environment provides
constraints and opportunities with respect to the technological, material,
monetary, and human resource procurement necessary for the organization
to function effectively. For instance, organizations must respond adequately
to the prevailing labour market conditions. Management must plan the
manpower needs of the organization according to the availability and
flexibility of labour. Manpower planning effectiveness depends on whether
management has a free hand in hiring, firing, retraining, or retrenching
workers with minimal legal and political interference. Effectiveness in
manpower planning for increased productivity and better service also
depends on wage levels and the flexibility with which wages can respond to
existing realities. For example, if economic or market conditions necessitate
lower wage levels, or a moderate increase in wages, or even a wage freeze or
reduction, then organizational effectiveness is enhanced to the extent that the
ethos governing wages permits a flexible response to these conditions. The
success of the organization would also depend on its adequate response to
the challenges to its financing activities posed by economic conditions such
as the availability of investment capital, inflation rates, interest rates, taxes,
etc. The level of technology available for carrying out the organization’s
tasks is also an important consideration for the organization’s success along
with the development of an infrastructure which facilitates the procurement
of materials, the location of suppliers, and distribution outlets.
Besides the economic and technological environment, the political and legal
environment also provides either facilitatory or inhibitory conditions for the
successful operation of organizations. The stability of governments (local,
regional, and/or national) creates business confidence. Legal systems which
provide protection from foreign competition and establish specific labour
mores and practices either promote or inhibit healthy organizations. Political
interference in the management of organizations and the bureaucratic
hurdles that management often encounters are widely known to contribute
to organizational failure.
Finally, the socio-cultural environment provides challenges for dealing with
human resources (a product of the socio-cultural environment) within the
organization and for dealing with the clients (customers, community served)
outside the organization. The socio-cultural environment of any given society
determines collective norms and values, and individual beliefs, attitudes,
and action preferences. Since organizational functioning depends on the
108
behaviour and attitudes of people within a given society, organizational Organizational Culture and
behaviour is profoundly influenced by the socio-cultural environment Change
within which the organization operates. Sensitivity to the socio-cultural
environment is most important for effective human resource management
in organizations. The preceding discussion is summarized in Figure 2,
which depicts the external environmental and internal organizational forces
that influence organizational effectiveness with respect to human resource
management.
Both international business and cross-cultural management studies recognize
the Managing Change importance of environmental variables, particularly
those relating to the socio-cultural environment as a major determinant of
organizational effectiveness both within a given country (Kanungo 1980)
and across various countries in the world (Kanungo and Wright 1983;
Adler 1986). However, in the context of developing countries, systematic
explorations of what these environmental and cultural variable are and how
management can deal with them for greater organizational effectiveness are
just beginning to take place (Kiggundu et al. 1983; Sinha and Kao 1988).
Most of our knowledge and technology about how best to manage human
resources within organizations stems from the social science research and
management theories aid practice of the developed world. American based
knowledge and technology have been imported by developing countries
with the hope that what has worked for American economic and human
resource development will work for development in the rest of the world.
The uncritical acceptance of Western development strategies is based on
the belief that the socio cultural features of developing societies commonly
referred to as ‘traditionalism’ are inimical to economic development.
For instance, it has been argued that the lack of a Protestant work ethic,
religiosity, and consequent fatalism, dependence, fatalism, etc. are the
common socio-cultural constraints on economic development in the context
of developing societies (Weber 1958) -hence the perceived need for change
and modernization through the emulsification of Western experiences of
organizational efficiency and entrepreneurship (McClelland and Winter
1969).
Unfortunately, the proven knowledge and technology in one socio-cultural
context does not necessarily work effectively in another context, primarily
because of the potent role of the contextual variables in determining
organizational functioning and effectiveness. Developmental strategies that
utilize socio-cultural features of the given society may actually be more
desirable for overall organizational effectiveness. This is clearly seen in the
case of newly industrialized Asian countries such as South Korea, Taiwan,
Singapore, and Hong Kong, as well as in Japan. The success of organizations
in these countries is ‘widely attributed to both management styles and work
attitudes that are rooted in Confucian values, familism, and institutional
structures that are not necessarily Euro-American’ (Sinha and Kao 1 988).

109
Understanding Change
4.5 CHARACTERIZATION OF
ENVIRONMENTS OF DEVELOPED AND
DEVELOPING COUNTRIES
How can we characterize the economic, political, and cultural differences
between the developed Western industrialized and developing Third World
countries? How do these differences impact the internal work culture
and the developing practices and employee behaviour in organizations
in developing countries? Can managers improve the handling of human
resources within the specific environmental and cultural constraints? What
are the facilitation and inhibiting conditions inherent in the environmental
contexts for the effective utilization of human resources? These are some
of the complex issues that have no easy solutions. However, some general
notions with respect to such differences can give a better appreciation of the
need for indigenous management in developing countries and may provide
some clues as to what forms it might take.
Although organizations in each country of the world have to adapt to the
unique features of their own environment, for the convenience of analysis
a look at the environment of organizations in two commonly understood
clusters is provided to (compete those located in Western industrialized
countries and those located in Third World or developing countries.
The two clusters differ on several dimensions with respect to their external
environment and internal work culture which influence both micro- and
macro-level organizational behaviour. These dimensions can be grouped
into three categories: dimensions relating to the economic and political
environment, dimensions relating to the socio-cultural environment, and
dimensions relating to the internal work culture. A listing oftlie dimensions
on which the two clusters differ is presented in Table 4.2.
Economic and political environment
The economic-technological and the political-legal environments with which
organizations interact can be characterized in terms of two critical factors
suggested by Triandis (1 984): (a) the predictability of future environmental
events and (b) the difficulty in obtaining resources from the environment.
Variations in the environment on these dimensions saw a significant
impact on overall organizational behaviour as well as on the behaviour
of individuals and groups within the organization. As Triandis points out,
predictability has implications for the difficulty of the environment. Very
predictable environments are easier than very unpredictable, and both very
simple and very complex societies live in very predictable environments’.

110
Table 4.2 Dimensions on which organizations in developed and developing Organizational Culture and
countries differ Change

The Western industrialized environment represents a high degree of

complexity: a multitude of firms are engaged in producing a vast array of
products and services. Their characterization as ‘developed’ means that
the infrastructure is developed, the supply of a trained labour supply is
developed, the capital markets are developed, and business-government
relations are developed to the point of facilitating commerce or at least not
111
Understanding Change hindering it. Thus the difficulty of obtaining resources is comparatively
low and predictability is on average relatively high. Developing countries
environment represents complexity of a different kind. They no longer
represent the traditional agrarian society but are on the way to industrialization
and modernization. The developing country environment becomes complex
because of the non-availability of resources to meet the high aspirations for
development. Thus, complexity is the result not just of what is, but what
‘is not’. Organizational means anti goals tend to be incongruous and create
difficulties for effective management. The developing country environment
can be characterized as being on average relatively more unpredictable. The
political and legal climates in most developing countries are perceived to be
relatively less stable. Very often they also represent certain characteristics
of ‘loose societies’ where ‘norms are not well developed’, and where
lawless corrupt practices are more the rule than an exception. This type
of environment also poses problems for obtaining the required economic,
technological, and skilled human resources. Thus the challenge facing the
manager in a developing country is quanlitatively very different from that
facing his or her counterpart in the developed world. Managing organizations
in a developing country requires some very different approaches and skills
in order to be successful.
Significant changes in the environment are necessary to make it more
predictable and easy. These include the supply of adequate financing,
vocational training programmes, technology development, political non-
interference, judiciary and executive reforms, etc:., and, in the realm of
organizational behaviour, management training and development, time
management, reward system reforms to reinforce appropriate behaviour,
etc. Socio-cultural Environment by separating developed and developing
countries along cultural lines, one can say that they represent two distinct
cultural groups. To understand this, one must examine what is meant by
culture. Most management researchers subscribe to a view of culture which
sees it as a set of ideas shared by members of a group. A useful definition
of culture from this perspective is provided by the anthropologist Roger
Keesing (1974). He describes culture as being an individual’s theory of
what his fellows know, believe, and mean, his theory of the code being
followed, the game being played. Culture is therefore not an individual
chartacteristic but rather denotes a set of common theories of behaviour or
mental programmes that are shared by a group of individuals.
Hofstede carried out an empirical analysis that resulted in a concise
framework of dimensions for differentiating national cultures. Although the
framework has some limitations, it is most widely used by researchers and
is recognized as a significant landmark in cross-cultural research (Triandis
1982). Hofstede used a forty-country questionnaire survey of employees of
one multinational organization; 1,16,000 questionnaires were administered
in two parts (1968 and 1972). From these data, four dimensions were found
to differentiate national cultures: power distance, uncertainty avoidance,
individualism (collectivism), and masculinity (femininity). These were
described by Hofsteded (1980) as: Power distance is ‘the extent to which
a society accepts the fact that power in institutions and organizations is
distributed unequally’ (1980).
112
Uncertainty avoidance is the ‘extent to which a society feels threatened Organizational Culture and
by uncertain and ambiguous situations by providing career stability, Change
establishing more formal rules, not tolerating deviant ideas and behaviours,
and believing in absolute truths and the attainment of expertise’ (1980).
Individualism ‘implies a loosely knit social framework in which people
are supposed to take care of themselves and their immediate families only,
while collectivism is characterized by a tight social framework in which
people distinguish between in-groups and out-groups; they expect their in-
group.
Masculinity expresses ‘the extent to which the dominant values in society
are “masculine” that is, assertiveness, the acquisition of money and things,
and not caring for others, the quality of life, or people’ (1980).
The cultural dimensions manifest themselves in organizations in a number
of ways. For example, associated with high masculinity is a performance
rather than a people orientation. ‘The existence of low uncertainty
avoidance implies a willingness to take risks and accept organizational
change. An individualist believes that involvement with organizations is
calculative, whereas a collectivist believes involvement with organizations
has moral basis. If power distance is low, subordinates consider superiors
to be ‘people like me’ and vice versa. A fifth dimension added by Kanungo
and Jalgan (1980) is that of abstract versus associative thinking, is also
particularly useful in understanding cultural difference between developed
and developing countries. This dimension can be summarized as follows:
‘In associative cultures, people utilize associations among event that may
not have much logical basis, whereas in abstractive cultures, cause-effect
relationships or rational Judeo-Christian types of thinking are dominant’.
Associative and abstractice cultures, the context plays an important role
in determining an individual’s perceptions, attributions, and behaviours.
In contrast, in abstrative cultures these tend to be influenced more by
abstract rules and principles applied equally to every situation. In addition,
in associative culture communication tends to be more face to face and
is between people who share a large body of historical information from
their culture and society. In contrast, in abstractive cultures, communication
through technological mechanism such as the mass media as well as
individual electronic media such as telephone and electronic mail tend to
be emphasized.
A culture also provides a guide for perception and attribution of others’
behaviour. Thus, within a cultural group, certain behaviours will generate
a feeling and response that is positive while others will generate a negative
feeling and response.
An example which can illustrate these phenomena in an organizational
context is the behaviour of ‘bypassing’, i.e. a subordinate making direct
contact with the superior of his boss. In a situation of low power distance,
this behaviour would be more likely to occur and would not be viewed very
negatively. In a situation of high power distance, this behaviour would be
unlikely to occur and, if it did, would be viewed very negatively. Thus, in
the latter situation, by passing behaviour would not only be inhibited, but
would in effect be punished, and thus be unlikely to recur.
113
Understanding Change Work culture within organizations Peoples’ assumptions, beliefs, and values
about different aspects of their world are shaped by environmental forces.
Members of an organization in a given environment therefore would share a
common set of assumptions, beliefs, and values that in turn would guide their
modal pattern of behaviour in the organization. In other words, the external
environmental forces shape the internal work culture of an organization.
Analysing culture from a broader perspective, Schein (1985, 1988) described
three levels of culture: basic assumptions and premises; values and ideology,
and artifacts and creations. The first level includes such things as the
relationship of man to nature, time orientation, beliefs about human nature,
the nature of man’s relationship to man, and man’s concept of space and
his place in it. These are usually taken for granted by members of a cultural
group and are ‘preconscious’. But it is these taken-for-granted assumptions
that determine values and ideologies (including ideals and goals as well as
paths for ‘getting there’) and the cultural artifacts and creations (such as
manifest behaviour, language, technology, and social organization). Schein
therefore argues that, in order to understand how organizations work, one
needs to understand the internal work culture, particularly the taken-for-
granted assumptions of organisational members.
In ‘Table 4.2, part C, we can set: the contrast between the developing
countries and developed countries on the dimensions of work culture. The
various culture determined assumptions that affect the work behaviour of
organizational members can be broadly categorized under two headings:
descriptive assumptions about human nature and prescriptive assumptions
about guiding principles of human conduct. The two sets of assumptions
are different in the sense that the former describes what human beings
are like whereas the latter provides normative guidelines for engaging
in and judging the appropriateness of behaviour. The work cultures of
organizations in developed and developing countries differ with respect
to the assumptions regarding the nature of cuasation and control over
outcomes (pleasant and unpleasant) which one experiences in life. Some
tend to believe that they are responsible for the outcomes, or their behaviour
causes and it controls the outcomes (internal locus of control). Others tend
to believe that the outcomes they experience in life are determined by forces
outside themselves (external locus of control). The locus of control beliefs
in developing countries tends to be more external, indicating more of a
sense of fatalism in the internal work culture.
Another difference in work culture can be traced to the difference in beliefs
about human potential and malleability. Within organizations in developing
countries, human capabilities are often viewed as more or less fixed with
limited potential. Hence career planning and progression with supporting
training facilities are extremely limited. In the developed countries, however,
organizations emphasize malleability and unlimited creative: potential of
human resources. Thus the internal work culture in the developing countries
is more conducive to the Theory X (carrot and stick) model of management
(McGregor 1960), whereas in the developed countries the Theory Y
(participative) model is relatively more suitable.

114
 The unpredictable and difficult environment in developing countries has Organizational Culture and
created a time perspective that excludes; future orientation and long-term Change
planning. In a predictable environment, being future oriented or having
a long-term perspective favours; planning, where in an unpredictable
environment a short-term past and present orientation seems more desirable
and hence would not favour planning. The success in task-related behaviour
is often judged by pragmatic considerations in the developed countries,
have individualistic achievement orientation of the Western world coupled
with high masculinity has encouraged the use of pragmatic norms. In the
developing countries, on the other hand, high collectivism and femininity
have encouraged the use of moralism based on traditions and religious
beliefs as the norm for judging the success of an individual’s behaviour.
People are judged successful not because of their nurturant and moral stand
to serve interpersonal well-being (rather than person-id well-being).
The characterization of people orientation in developing country
organizations as authoritarian and paternalistic indicates a high power
distance, whereas the collegial participative nature of relationships in
developed countries is indicative of a relatively lower power distance. In the
superior-subordinate relationship, paternalism and dependence are valued
and encouraged in developing countries. The trend is quite the opposite
in developed countries. Finally, the behaviour orientation towards the
environment reveals context dependence in developing countries. This is
indicative of the associative mode of thinking. The context independence of
the developed countries reflects an abstractive mode of thinking. Abstract
principles, rules, and procedures are considered absolutes and transcend
contextual forces in guiding behaviour in the developed country context. In
developing countries, such principles are only relative and contextual forces
override principles when the two in conflict.
Indigenous management theories need to address the impact of these cultural
factors on individual behaviour in organizations. One assumption implicit
in most work in the area of comparative or cross-cultural management, and
one shared by the authors, is that the organization is indeed an ‘open system’
and cultural values from the environment are brought into the work place
and have a very strong impact on the organization’s work culture.

4.6 THE EMERGENCE OF INDIGENIZATION

AND THE CHANGE PROCESS
For long, countries in Asia, Africa and the developing world have
generally taken for granted that economic and industrial development are
possible only through the diffusion of modern technology from the West,
which inevitably necessitated the wholesale adoption of management
practices, patterns of work organization and interpersonal relationships
prevalent in industrially advance countries. This paradigm has not
remained unchallenged. Instances of variations along cultural lines in
the behaviour of members of organizations are innumerable. To mention
only a few, it has been observed that while British managers rely mostly
on formal communication, the Chinese communicate face to face or use
the grapevine, being more relationship oriented. Again, the Chinese have
115
Understanding Change their own particular approach to the international trading network based not
on contract but on trust and family ties. It is, therefore, not surprising that
an increasing number of behavioural scientists have begun to have serious
doubts about the universal applicability of single management techniques
such as participation, incentive systems and job enrichment.
There does not seem to be the ‘one best way’ in management. Not only
has the narrow concept of development of the 1950s and the 1960s been
seriously questioned and widened to include non-economic and human
dimensions, but factors considered ‘universal’ with regard to effective
management and organizational functioning are regarded as ethnocentric and
applicable only within very specific socio-cultural conditions. Management
and work activities in an enterprise depend critically on social values of its
members which are culture-bound. The cultural embeddedness of industrial
organizations has to be recognized. The recognition of ‘cultural relativism’
in people’s social and work values and in the management practices found
to be effective in different countries is a corrective to the hegemorlic yet
optimistic assumption implied by ‘scientific management’, by the Weberian
‘bureaucratic’ ideal type, or even the enlightened human relations school,
that there exists a universal or monolithic prescription for the management of
work organizations. Often cited is the case of Japan which has risen phoenix-
like from the ashes of World War I1 and become within a very short period
one of the foremost industrially advanced countries in the world, without
having to cast off its traditional social values and cultural characteristics.
In fact, for several decades-particulary during the 1970s and 1980s-the
economic success of Japan and of some Asian NICs (Newly Industrialized
Countries) of the Pacific rim were widely attributed to management styles,
work attitudes and values rooted in Confucian social philosophy, familism,
and institutional structures that are not by any means Euro-American. Asian
countries are ‘experimenting’ with a large variety of management styles
and organizational models which are indigenous in that they are based on
concepts and ideas embedded in their cultures, philosophical systems and
traditions that are in sharp contrast to those of the West.
Although recent economic problems in Asia have somewhat blurred the
heroic image of Japan and of the ‘Asian Tigers’, their past economic progress
has served to arouse Western-oriented theorists from their torpor. Indigenous
developments have posed a serious challenge to the presumed universality
of Western theoretical formulations. This may be somewhat disconcerting
for a majority of us who have been fashioned by our background of a pre-
eminently Western education and orientation. Knowledge in the field of
management-and, for that matter, in the entire field of social sciences has
come to a point where what used to be taken for granted and was considered
sacrosanct. It has become essential in today’s world to abandon a parochial
and ethnocentric outlook and become sensitive to alternative formulations
and approaches. There is need to evolve the management in the cultural
contexts of Asian realities. It has now been conceded that the study of
management practices and organizational behaviour has to be conducted
with a broader perspective and a receptiveness to ideas and inspirations
drawn from non-Western experiences in the workplace, especially from
Japanese management and from the successes of the East Asian economies
of China, Hong Kong, South Korea, Singapore and Taiwan.
116
 The patterns of management and organization in evidence in East and South Organizational Culture and
Asian countries as well as in many parts of other non-Western regions are Change
often regarded as exemplifying what has often been called indigenization,
i.e., a process by which organisations in their functioning are adapted to the
socio-cultural soil of the host country so that the end-product is appropriate
as well as unique. It is to be noted, however, that in most of the Asian
countries, including the ‘Dragon’ and the ‘Tigers’, management practices
and organizations contain many elements of Western practices. But it has
rightly been remarked that Japanese and American management are 95 per
cent the same, but differ in all important respects. The patterns that emerge
display a kind of ‘adaptation of the requirements of work and modem
technology to specific elements of culture. They constitute a synergistic
blend of traditional indigenous roots and modern techniques.

4.7 INDEGENIZATION AND THE COMPLEXITY

OF MANAGEMENT OF CHANGE
Indigenization in management is a complex process. It is largely
endogenous, utilizing fix management some of the basic tenets of
Buddhism, Confucianism, Taoism and Hinduism as also the ‘models’ set by
experiences in the family and other social institutions still powerful in many
countries of Asia. But by and large, it is a process in which there is positive
valence towards one’s own traditions and cultural heritage as well towards
the one that is ‘foreign’ and imported. It would be an over-simplification
to consider the two as opposite and inimical, as pitted against each other,
and regard the process of indigenization as representing a clash between
tradition and modernity. In essence, indigenization implies that what are
useful and valuable in the two systems in the contemporary context are
retained and integratged to generate a synergic work culture that is not only
congruent with socio-cultural realities but also functional and effective. It
is an ‘assimilative synthesis’ of the two systems. As illustrated by the case
of Korean corporate culture. It results from interaction between specific
characteristics of organization (size, technology, human and material capital
and organizational climate), task environment (consumers, government and
labour market) and social environment (societal factors such as education
and cultural dimensions). It does not in any way imply that the ‘foreign’
has to be rejected because the influence has come from outside, or that
indigenous practices are good and are to be revived and reatined simply
because they are ‘local’ and rooted in the culture. In short, work organization
and management practices are aligned with cultural values as well as with
the needs and demands of modern technology (Sinha and Kao, 1988).
In the context of the globalization of economy and business enterprises
and the ceaseless onslaught of television and other mass media catering
to Western values and lifestyles, a question that is automatically raised is
whether, in years to come, the process of indigenization shall continue to
have relevance or significance. The revolution brought about in international
travel and communication by the marvels of science and technology has
fostered intercultural contact at the global level on a scale undreamt of a few

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Understanding Change years ago. The world has shrunk and transformed itself into the proverbial
‘global village’.
With the globalization of business and the jet-age of travel, individuals
frequently move between cultures, and intermingle across national
boundaries. People possessing divergent systems of values rub shoulders
and work together. This is likely to foster the emergence of a common
pattern of attitudes and behaviour in management and organizations all over
the world. Further, people with diverse cultural backgrounds now work and
closely interact in the same organization and share common organizational
goals. They tend to acquire values and behaviour patterns that constitute the
‘culture’ of the organization. As a result, individual cultural proclivities are
likely to be whittled down and rounded off. That being the case, individual
behaviour is expected to conform progressively to universally prevalent
norms and behaviour patterns.
The fact of the matter, however, is that neither organizational socialization
nor the intermingling of people of diverse cultures brings about complete
uniformity’ of attitudes, values and behaviour dispositions. Similarities
may appear in some superficial features, like dress, diction, manners and
fashion. The experience of countries that have followed the ‘melting pot’
policy has shown that the basic cultural features of most ethnic groups tend
to persist. What may be called the ‘social traits’ of groups, learned through
generations of collective experience and having functional significance in
their respective eco-cultural contexts, continue to linger. The process of
indigenization thus remains important. Therefore, to function effectively
in settings where people have divergent perceptions, expectations and
norms of superior subordinate relationships, it is not only useful but also
essential to be adequately sensitive to the various cultural influences and
their impact on employees’ behaviour both as individuals and collectively,
and to the indigenous transformations that take place in the functioning of
organizations.
Exposure to electronic mass media and the consumerism they foster are
serious matters. The influence of the media is so powerful and widespread
that the possibility of ‘homogenization’ erasing to a very large extent
the richness and uniqueness of different cultural groups cannot be
brushed aside. The question that is pertinent is whether, if such cultural
homogenization becomes a reality, indigenization of management or, for
that matter, indigenization as such-will continue to have relevance. The
point can be debated endlessly. It would suffice here to point out that even
in countries which boast of rich and ancient cultural heritage and continuity,
many uniformities called ‘modernity’ are apparent. Western management
practices are increasingly being adopted. In the Chinese-speaking world,
the influence and importance of the family network in business is no longer
what it used to be. Confucian values and familism in the function of the
work organizations are not as strong as they were two or three decades ago.
Need for autonomy participation in decision-making and many other values
typical of work organizations in the West are gradually becoming features
of organizational functioning in many Asian countries

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Every culture has its inherent strength and vitality not easily swept away Organizational Culture and
by external influences. Monotonic cultural homogenization is certainly a Change
possibility, but is not likely to turn into a reality given the strength and
resilience of each culture. While globalization may result in drastic
reduction of diversities and emergence of similarities at the surface level,
the core elements of cultures would prevail and influence the behaviour
of individuals and work organizations, often in very subtle forms. Despite
globalization and the forces of homogenization, cultural proclivities would
remain, and differences in the hopes, beliefs, perceptions and expectations
regarding the behaviour of superiors and subordinates shall persist and
continue to influence the functioning of organizations. It is noteworthy
that even European countries which belong to ‘Western’ culture, and to
that extent are exposed to very similar homogenizing influences, display
very distinct ‘intercultural’ differences in the field of management. In
countries like France and Italy managers tend to emphasize the importance
of power motivation within the organization more than their counterparts
in the United Kingdom, the Netherlands and Germany. Again, managers
in France and Italy are seen as ‘experts’ who are expected to have answers
to any problem, while those from the Netherlands and the United States
are regarded as ‘participative’ problem-solvers. What is encouraged in
one culture as ‘participative management’ is seen in another as managerial
incompetence. These countries belong to Western culture and share Western
values. Yet they display interesting basic differences. Even in the context of
globalization, awareness of the operation of cultural factors and insight into
indigenization in organizational behaviour are going to remain effective tools
for managers. The culture-technology interface will remain a significant
feature of work organizations as long as complete homogenization does
not come allout-and this is quite unlikely. A look at the processes involved
reveals that management and organizations are culture-specific and at the
same time have tendencies towards universally valid characteristics.

4.8 STRATEGIC BEHAVIOUR OF STRATEGIC

DEVELOPMENTAL ORGANIZATIONS
Western strategic management has revolved mostly round diversification
and vertical integration and competitive product, niche, and cost-advantage
strategies. While appropriate to corporate organizations, these strategic
options are far less relevant to Third World strategic developmental
organizations. Other strategic elements, discussed below, seem to be far
more Irrelevant to the latter.
Domain Compliance
Strategic developmental organizations in the Third World tend to pursue
national priorities such as a greater output of essential goods and services,
import substitution and greater national self-reliance, greater equity, etc.
Since they are expected to play a pace-setter role, obtaining the: compliance
of the domain served to national priorities becomes an important goal of’
strategic developmental organizations. The Indian Planning Commission for
example develops national as well as sectoral growth targets and monitors
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Understanding Change their achievement by the various ministries, governmental agencies, state
governments, etc. Since target setting is in part a gaming exercise, one
commonplace strategy pursued by apex organizations appears to be to pitch
high targets in the hope that actual achievement may be close to the secret
real targets. Another strategy appear; to be to reward the good performers
through speedier sanctions and more munificent allocation of resources for
their projects. Often domain compliance is sought through the participation
of representatives of the domain, such as by sponsoring conferences of
sub-strategic organizations to evolve criteria for evaluating the latter’s
performance, co-opting prominent beneficiary organizations onto the
governing boards of strategic developmental organizations, etc. Deputing
representatives of the strategic organization onto the governing boards of
sub-strategic organizations, developing a cadre of professional managers
for the sector through a central training institute set up by the strategic
organisation, organizing periodic performance reviews of sub-strategic
organizations by desk officers of the strategic organization. etc. are other
means of control commonly used by strategic developmental organizations.
In India, these options are known to be employed by the government
monitors of public enterprises (Khandwalla 1986). The domain compliance
alternatives may be usefully contrasted with the price leadership, collusion,
etc. means employed by dominant corporations for securing compliance of
rivals (Sclierer 1980).
Learning strategy
Strategic developmental organizations often operate in relatively unfamiliar
terrains. They therefore face a real danger of initiating long-term projects or
actions that are ill-conceived in hindsight. Because of the power over domain
of these organizations (especially the power of the apex and apearhead
ones), these ill-conceived actions may result in vast waste of resources
or suffering. The Indian public sector abounds in stories of expensive
projects that turned out to be duds (Khandwalla 1986). Unfamiliarity with
technology and the needs of the clientele can aggravate flawed initial choices.
Studies of successful Third World public programmes and public sector
enterprises (Khandwalla 1986) indicate that they tend to pursue vigorous
learning strategies, e.g. starting small and growing fast only after mastering
technological and marketing intricacies; starting with only one goal and
only later adding other goals; starting with one product and diversifying
only later; starting with a pilot project and only later scaling up; entering
in a small way the post difficult market segment and then going in a big
way into the easier markets; phasing expansions, etc. Another learning
strategy commonly followed is to team up with one or more enterprises
or institutions in the developed countries for technology transfer. Thus, in
the 1950s HMT, an Indian public enterprise, teamed up with Oerlikon of
Switzerland to transfer machine tool technology to India; BHEL, another
public enterprise, later teamed with Siemens; and two Indian management
institutes secured management technology from Harvard and Massachusetts
Institute of Technology.

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Innovation diffusion Organizational Culture and
Change
Given the responsibility for the growth and development of the domain,
the strategic organization is particularly concerned that an innovation or an
improved practice is diffused throughout the domain served as quickly as
possible. This is in sharp contrast with the corporate practice of protecting
an innovation by defensive patenting or other means (Scherer 1980). The
strategic organization tries to diffuse innovation by publicizing it, by
deputing teams to organizations served to try and institutionalize it in them,
by training change agents working in these institutions; by codifying ‘good’
management practices in a sector in the form of guidelines (BPE and BHEL
1976), etc.
Seeking Autonomy
Many strategic developmental organizations seek respite from bureaucratic
pressures and political pressures in order to pursue their missions more
forcefully. Their bureaucratic and political masters also seem to have begun
to realize that operating autonomy to pursue public policy objectives is
essential for mission accomplishment. Thus, a number of strategic options
have begun to emerge for increasing their autonomy without decreasing
their accountability for mission accomplishment. A second idea is the
memorandum of understanding device (Sreedhar Sharma 1982) under which
the government and the strategic developmental organizations sign a formal
document setting forth their respective obligations towards one another. A
third idea is to bring the culture of the well-managed strategic developmental
organization into the governmental bureaucracy, by seconding its chief
executive to a monitoring role In the government (Khandwalla 1986). Several
Indian public enterprises have learnt to increase their autonomy by building
up their credibility with government monitors. ‘They seek this by involving
government monitors in their problems, by keeping them regularly posted
on their actions, by networking with important officials and politicians
within the government structure, and by showing good performance vis-
a-vis strategic goals of the government (Khandwalla 1986). Some have
sought to decrease their financial dependence on the government resorting
to national and even capital markets for funding agencies.
Domain development strategy
Since domain development (rather than market exploitation) is a major
objective of strategic developmental organizations, there is need to develop
a number of options for this. One option is networking with a number
of institutions in the domain in order to develop a domain development
strategy(Paul1982). As an example, Indian term lending institutions, mostly
government owned, have created an inter-institutional meeting forum to
coordinate their activities with a view to channelling capital to the private
manufacturing sector. Public enterprises in India have created an institution
called the standing Committee for Public Enterprises (SCOPE) for sharing
problems and concerns.
A second option is one of institution building, i.e. of helping existing
sub-strategic organizations with training, resources, etc. to build up their
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Understanding Change capacity for developmental action. As an example, the Indian Institute of
Management at Ahmedabad has helped a number of other MBA programmes
in India and other Third World countries to get going; the Ahmedabad
Textile Industry’s Research Association conducts a variety of technical and
operations-related studies in textile mills with a view to improving their
efficiency, productivity, etc.
A third option is for strategic developmental organizations to start one or
more specific purpose organizations, each playing a specialized role in the
overall developmental strategy for the sector. For example, the Industrial
Development Bank of India, the apex term lending institution in India, has
helped set up the Entrepreneurship trainers; in association with governments
of various Indian states, it has also formed state-level subsidiaries for
channelling term finance to small- and medium-scale enterprises. Major
nationalized Indian banks have collaborated in setting up the National
Institute of Bank Management to train bankers and conduct banking-related
research. Several large Indian public enterprises such BHEL and the State
Bank of India have set up staff colleges for training purposes. HMT, a well
known Indian public enterprise, took the lead in the setting of the Central
Machine Tool Research Institute. The Behavioural Research Centre has
been setting up village cooperatives of low caste persons in Gujarat to
increase their self-reliance; the Nationl Dairy Development Board has been
playing a major role in setting up ‘Anand pattern’ cooperative dairries in
other parts of India. A number of voluntary organizations such as the Self-
employed Women’s Association and Tilonia (Roy 1986- 87) have assisted
in their replication in other parts of India.
These domain development strategies may be usefully contrasted with
the ‘secure market domination to cream the market’ strategies pursued by
corporate organizations (Porter 1980).

4.9 CLOSING CULTURAL GAPS

Without a supportive culture, every action by top management will be
discounted by the groups below -even top-down efforts at introducing
cultural change.
There are many cases in which executives have taken dramatic cultural
change initiatives even in their own behaviour coupled with symbolic
deeds and fiery speeches in order to dictate cultural change to the company
- but to no avail. Only when workgroup members encourage one another
to be receptive to overtures by management, can the whole cultural change
programme be successful. For example, various work groups might include
such new norms as: Give management another chance; assume good
intentions. Managers and consultants, therefore, have to work especially
hard to encourage the work groups, including the executive groups, to meet
one another halfway if cultural change programmes are to succeed.
How can culture change initiatives close the gap?
How can an organisation move its culture from the actual to the desired?
Will cultural change initiatives take it out of a culture and put it back on
track for solving present and future problems?
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Will the organisaiion survive the shock of cultural change? Organizational Culture and
Change
When the current culture is at least hopeful, the impact of survey results on
workers is almost miraculous. In fact, some cultural change from the actual
to the desired norms can take place just by listing the agreed new set of
norms as people start “playing them out” immediately. But when the current
culture is cynical, depressed and in a deep cultural rut, the response to the
survey results is quite different. Even when large cultural gaps are shown
or when listing demonstrates the tremendous differences between actual
and desired norms, employees seem apathetic and lifeless. They respond to
‘cultural change needs by saying that their work units cannot change for the
better until the level of management above them and the rest of the company
change. They believe that the external system is keeping them down.
Curiously, when a cultural gap survey is done at the next highest level, the
very same argument is heard again. “We have no power to initiate cultural
change; we have to wait for the next level to let us change; they have the
power”! It is shocking (after conducting the cultural gap survey for an entire
organisation), to present the results to the top management group only to
find the same feelings of helplessness. Here top management is waiting
for the economy or market forces or something to change before they feel
that could take action. In actuality, it is the corporate culture that is saying:
Don’t take on responsibility, protect yourself at all costs; don’t try any
cultural change initiatives until everyone else has changed; don’t lead the
way, follow. This the perfect example of a company in a culture rut, where
the shock of realising the discrepancy between actual and desired norms is
just too great to confront. Instead, the organisation buries its head and hopes
everything will be sorted out by itself, or shuts the plant/site/department/
division/business- because it feels the problems are insurmountable. Even
in the face of strong evidence of a serious problem, time and time again, it
has resulted in organisational denial promoting the norm better to use energy
to fight for good severance pay than effect the cultural change needed for
survival. Such organisational denial of impending doom is a much more
powerful and perhaps destructive force than any case of individual denial.
The group’s power to define reality clouds everyone’s better judgement.
The bureaucratic culture “wins” again. Closing the cultural gap through
cultural change initiatives requires accurate information (from all areas),
commitment (from top to bottom), and multi-levelled and functional groups
actively participating in cultural change management techniques to promote
new norms.
In one case a 3 day cultural change management workshop was held at
a large industrial organisation that included the chief executive and 10
directors. It was suggested that a representative survey of cultural gaps be
subsequently conducted across all divisions in the company. (In this way, a
cultural change report on the company’s specific culture could be produced
and used to generate a lively and interesting discussion). A few days later
the director for human resources called and declared: “No, we had better not
do this, I don’t think the executive group realy wants to know what is going
on in the company. Besides, we can’t take the chance of surprising them
with your survey results”. An organisation possibly beyond help!
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Understanding Change Gaining control of the corporate culture is not only possible but necessary
for today’s organisations. As strategic changes in corporate direction is
planned, cultural change to replace old cultures - in one or more divisions
or for the whole organisation - is often imperative. But just as old cultures
can become out-of-date and dysfunctional, the same can happen with new
ones. Changes in the organisation’s setting - and corresponding changes
in its strategy, structure and reward systems - can make any culture less
functional than before. An important part of managing corporate cultural
change therefore is to continue monitoring and assessing norms. If the
cultural change is not managed explicitly, it may be just a matter of time
before the organisation is once again disrupted. But, where cultural change
is managed explicitly, the company can expect significant improvements
in both morale and performance; it will be, in the best sense of the word, a
cultural organisation.

4.10 SELF-ASSESSMENT QUESTIONS

1) What is organisational culture?
2) Describe how organisational culture change can take place? Illustrate
from an organisation where culture change has taken place.
3) Describe some cross-cultural experiences of organisational culture
and change in the present scenario.
4) What aspects have to be taken into consideration for closing cultural
gaps?

4.11 FURTHER READINGS/REFERENCES

Adler, N J. (1986) International Dimensions of Organizational Behavior,
Boston, MA: Kent Publishing Co.
Hofstede, G. (1980a) Culture’s Consequences: International Differences in
Work-related Values, Beverly Hills, CA: Sage.
Kanungo, R.N. (1980) (1980) Biculturalism and Management, Toronto:
Butterworths.
Kanungo, R.N. and Wright, R.W. (1983) ‘A cross-cultural comparative study
of managerial job attitudes’, Journal of International Business Studies, Fall:
1, 5-29.
Kiggundu, M.N., Jorgensen, J.J. and Hafsi, ST. (1983) ‘Administrative
theory and practice in developing countries: a synthesis’, Administrative
Science Quarterly 26, 1 : 66-84.
Mc:Clelland, D.C. and Winter, D.G. (1969) Motivating Economic
Development, New York: Free: Press. Schein, B.H. (1985) Organizational
Culture and Leadership, San Francisco, CA: Jossey-Bass.
Schein, E.H. (1988) ‘Innovative cultures and adaptive organizations’,
Working Paper, Sloan School of Management, Massachusetts Institute of
Technology, Cambridge, MA.

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Sinha, D. and Kao, H.S.R. (1988) ‘Introduction value-development Organizational Culture and
congruence’, in D. Sinha and H.S.R. Kao (eds.) Social Values and Change
Development: Asian Perspective, New Delhi: Sage.
Triandis, H.C.(1982) ‘Review of culture’s consequences: international
differences in work related values’, Human Organization 41, 86-90.
Triandis, H.C. (1984) ‘Toward a psychological theory of economic growth’,
International Journal of Psychology 19, 79-95.
Weber, M. (1 958) The Religions of India: The Sociology of Hinduism and
Buddhism, Glencoe, IL: Free Press.
Khandwalla, P.N. (1986) ‘Performance deteminants of public enterprises:
significance and implications for multinationalisation’ in A. Negandhi,
H. Thoman, and K. Rao (eds.) Research in International Business and
International Relations, vol. 1, Greenwich, CT: JAI Presee.
Murthy, K.R.S. and Nath, N.C.B. (1988) ‘Can a holding company be an
effective buffer for government enterprise’, Vikalpa 13, 3: 3- 15.
Patil, S.M. (1982) HMT Over Three Decades, New Delhi: Documentation
Centre for Corporate and Business Policy Research.
Paul, S. (1982) Managing Development Programmes: The Lessons of
Success, Boulder, CO: Westview Press.
Porter, L.W. and Lawler, E. (1968) Managerial Attitudes and Performance,
Homewood, IL: Irwin.
Roy, S. (1986-7) ‘The Tilonia model as a new approach’, presented at the
International Conference on Organizational Behavioural and Perspectives
for Social Development, IIMA, Ahmedabad, 29 December 1986 to 2
January 1987.
Scherer, F.M. (1 980) Industrial Market Structure and Economic Performance,
Chicago, IL: Rand McNally.
Sreedhar Sharma, J. (1982) ‘The enterprise contract system in public
enterprise management -the French experience’, IPE Journal 5,4: 41, 69-76.

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