Organization Theory: Organization Theory: Strategy Implementation Strategy Implementation

ProcessProcessSteven E. PhelanSteven E. Phelan

July, 2006July, 2006

STRATEGY EXECUTION:STRATEGY EXECUTION:

Power, Culture, PeoplePower, Culture, People

OverviewOverview• Culture

Hrebiniak, Chapter 8 Morgan, Chapter 5 Charan, “Culture change at Home Depot” Case: “Culture change at Seagram”

• Power Hrebiniak, Chapter 9 Morgan, Chapter 6 Kramer “The great intimidators” Case: “Donna Dubinsky”

• People Pfeffer “Competitive advantage through people”

CultureCulture

Organizations as CulturesOrganizations as Cultures• Culture: “the way we do things around here”

National cultures Regional cultures Organizational cultures Departmental cultures

• Culture… Is not homogenous Affects performance Is affected by peformance

Cultural metaphorsCultural metaphors

• How is culture like: A language, an iceberg, an onion, an

umbrella, or sticky glue? What else could be a metaphor for culture?

Exercise: Corporate culturesExercise: Corporate cultures

• Take some time to share the following answers to these questions about your organization with a partner: What kinds of beliefs and values dominate your organization

(officially…unofficially) What are the main norms (do’s and don’ts) What are the dominant stories and rituals? What are the favorite topics of informal conversations? Think of three influential people in the organization. How do

they symbolize the character of the organization? Are there subcultures? Are they in conflict or harmony?

DebriefDebrief

• What struck you as abnormal or strange about your partner’s answers? Why?

• What management challenges do you think your partner’s organization might present? How hard would it be to change the culture?

• What are the implications for strategy implementation?

Some key questionsSome key questions

Where does culture come from?

How is it sustained?

How do we create or change a culture?

Where does culture come from?Where does culture come from?• Leadership (setting mission/vision)

Selznick (1957) says purpose-setting is essence of leadership• Shared values

Religious groups, etc.• Stories, legends, myths, symbols• Reward systems• Professional values

e.g. engineers, doctors, accountants• Historical accidents• Morgan makes a big deal about enactment – what is it

and why is it important?• Hegemony and ideology

Indoctrination of masses, coalition with powerful Hrebiniak mentions “cultural due diligence” on new recruits

Changing a cultureChanging a culture• According to Hrebiniak:

Don’t try to change attitudes, change behavior (and attitudes will follow)

Behavior doesn’t change easily in the face of requests to do so. Requests are “useless and ineffective”.

• Change people, incentives, controls, processes, and structure• “Get the right people on the bus”• Changing incentives might even affect the “wrong people”

Beware of excessive speed• People must build a belief in the new culture• Performance builds belief• One change agent advocates manufacturing ‘short-term’ wins

Can cultures and cultural change be measured?

Changing culture: A Changing culture: A comprehensive listcomprehensive list

• trigger shifts in the established mindset• breakdown habitual behavior patterns including

routines, structures and rewards• move outside established information channels• use data and analysis to shock people• introduce new people and outsiders• co-opt or break adversarial political alliances• revamp employee communication mechanisms• training and development• use symbolism , ritual, and enactment• reward new behavior, celebrate success• provide leadership

Culture change at Home DepotCulture change at Home Depot• How did Nardelli change Home Depot’s

culture Through the use of mechanisms to alter the

social interactions of people in the organization• the ‘social architecture’

By adding a “dose of discipline” to the entrepreneurial culture

• With standardized metrics, disciplined talent reviews, Monday morning conference calls, mapping the HR process, learning forums, focus on accountability

Was this a major achievement???

Strengths of the cultural metaphorStrengths of the cultural metaphor• Emphasizes the symbolic significance of what we do• We learn that organization and shared meaning may be

one and the same• We see how success hinges on the creation of shared

meaning• Leaders and managers gain a new understanding of their

impacts and roles• We see that organizations and their environments are

enacted domains• Strategic management is understood as an enactment

process• The metaphor offers a fresh perspective on organizational

change

Limitations of the cultural metaphorLimitations of the cultural metaphor

• The metaphor can be used to support ideological manipulation and control

• Culture is holistic and cannot readily be managed by a simple checklist

• Important dimensions are invisible and what is easily seen may be relatively unimportant

• Culture usually has a deep political dimension

Seagram CaseSeagram Case• Questions:

Why has Seagram initiated a values initiative?• How well has the implementation been done to date?• What tools and techniques are more potent than the use of

explicit corporate values? If you were one of Seagram’s executives, how would you

respond to each of the five challenges at the end of the case?

• Actions on recommendations• Punishments for values violators• Rewards for value champions• Values for MCA/Universal• Sustaining and consolidating the change?

PowerPower

Organizations as political systemsOrganizations as political systems• Power – the ability to get what you want, when

you want• Politics – the process of acquiring and using

power• As no-one can get everything they want when

they want it, politics inevitably involves coalitions, compromises, and conflict management.

• According to Morgan, many organizations have strong autocratic tendencies – does that mean CEOs always get what they want?

Sources of powerSources of power• Toffler

Power rests on delivering or withholding:• Violence (feudalism) – coercive power• Wealth (capitalism) – reward power• Knowledge (third wave) – expert power

• Lukes Three faces of power

• Ability to make decisions (authority)• Agenda-setting: ability to decide who/what/when/how decisions will

be made (influence)• Ability to shape perceptions so that policies that favor the powerful

are seen as natural, normal, or rational and therefore not questioned (ideology or enactment)

• Resource Dependency

Resource DependencyResource Dependency Control of:

• scarce resources, • decision processes, • knowledge/information, • boundaries, • technology, uncertainty,• informal networks, • counter-organizations

Units that deal with the critical problems of the organization will typically have power

• Dependency is the opposite of power

ExerciseExercise

• How political is your organization? Which department has the most power?

• Does this follow the predictions of resource dependency theory?

How much conflict is there between departments?

Does politicking hurt performance or limit the strategic choice?

Power and ethicsPower and ethics

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

Great intimidatorsGreat intimidators• Angle

Social intelligence vs political intelligence Empathy/soft power vs. intimidation/exploitation Leverage strengths vs. leverage fear/anxiety

• Behaviors Get up close and personal, be angry, keep them guessing Know it all, be aloof

• Counters Do your homework, work harder Laugh at their antics, earn their respect, call their bluff Keep your perspective, stick around

Implications for Implications for Strategy ExecutionStrategy Execution

• Dysfunctional organizations Often have misaligned power structures Can be very resistant to new initiatives Hrebiniak argues that boards will often

discipline CEOs that don’t make tough decisions (really?)

Successful execution may require co-opting or destroying the dominant elite

• Ability to use hard power as well as soft power Strategic choices create new fiefdoms

Donna Dubinsky CaseDonna Dubinsky Case• Questions:

Why was Dubinsky initially so successful at Apple? How and why did things unravel for Dubinsky?

• What changed in the business and the Apple context? Why did she respond the way she did to the JIT

proposal? (Put yourself in her situation -both intellectually and emotionally)

• Do you think she and others at Apple could have done things differently?

• How should Campbell respond to Dubinsky?

• What are the key lessons from this case for strategy execution?

Strengths of the political metaphorStrengths of the political metaphor

• We see how all organizational activity is interest-based

• Conflict management becomes a key activity• The myth of organizational rationality is

debunked – rational for whom?• Organizational integration becomes problematic• Politics is a natural feature of organization• It raises fundamental questions about power and

control in society

Limitations of the political metaphorLimitations of the political metaphor

• Politics can breed more politics Is there an optimal level of politics? Is zero the target?

• It underplays gross inequalities in power and influence Can a marketer ever become CEO in an

engineering organization?

People advantagePeople advantage• Pfeffer’s practices

Employment security Selective recruitment High wages Incentive pay Employee ownership Information sharing Participation &

empowerment Self-managed teams

• Ctd. Training Rotation and cross-

training Symbolic egalitarianism Wage compression Promotion from within Long view Measurement Overarching philosophy

REALISTIC OR NOT?