Managing Strategic Change
“Just as bad money has always driven out good, so the talented general manager, the person who makes a company go — is being overwhelmed by a flood of so-called professionals,’ textbook executives more interested in the form of management than the content, more concerned about defining and categorizing and quantifying the job, than in getting it done. . . . They have created false expectations and wasted untold man-hours by making a religion of formal long-range planning.”1 H. E. Wrapp, New York Times.
But is this truly a process in itself, capable of being managed? Or does it simply amount to applied intuition? Are there some conceptual structures, principles, or paradigms that are generally useful? Wrapp, Normann, Braybrooke, Lindblom, and Bennis have provided some macrostructures incorporating many important elements they have observed in strategic change situations.4 These studies and other contributions cited in this article offer important insights into the management of change in large organizations. But my data suggest that top managers in such enterprises develop their major strategies through processes which neither these studies nor more formal approaches to planning adequately explain. Managers consciously and proactively move forward incrementally:
- To improve the quality of information utilized in corporate strategic decisions.
- To cope with the varying lead times, pacing parameters, and sequencing needs of the “subsystems” through which such decisions tend to be made.
- To deal with the personal resistance and political pressures any important strategic change encounters.
- To build the organizational awareness, understanding, and psychological commitment needed for effective implementation.
- To decrease the uncertainty surrounding such decisions by allowing for interactive learning between the enterprise and its various impinging environments.
- To improve the quality of the strategic decisions themselves by (1) systematically involving those with most specific knowledge, (2) obtaining the participation of those who must carry out the decisions, and (3) avoiding premature momenta or closure which could lead the decision in improper directions.
How does one manage the complex incremental processes which can achieve these goals? The earlier articles structured certain key elements;5 these will not be repeated here. The following is perhaps the most articulate short statement on how executives proactively manage incrementalism in the development of corporate strategies:
Typically you start with general concerns, vaguely felt. Next you roll an issue around in your mind till you think you have a conclusion that makes sense for the company.
References
1. See H. E. Wrapp, “A Plague of Professional Managers,” New York Times, 8 April 1979.
2. This is the third in a series of articles based upon my study of ten major corporations' processes for achieving significant strategic change. The other two articles in the series are:
J. B. Quinn, “Strategic Goals: Process and Politics,” Sloan Management Review, Fall 1977, pp. 21–37;
J. B. Quinn, “Strategic Change: 'Logical Incrementalism,'” Sloan Management Review, Fall 1978, pp. 7–21.
The whole study will be published as a book entitled Strategies for Change: Logical Incrementalism (Homewood, IL: Dow Jones-Irwin, 1980).
All findings purposely deal only with strategic changes in large organizations.
3. See R. M. Cyert and J. G. March, A Behavioral Theory of the Firm (Englewood Cliffs, NJ: Prentice-Hall, 1963), p. 123. Note this learning-feedback-adaptiveness of goals and feasible alternatives over time as organizational learning.
4. See:
H. E. Wrapp, “Good Managers Don't Make Policy Decisions,” Harvard Business Review, September–October 1967, pp. 91–99;
R. Normann, Management for Growth, trans. N. Adler (New York: John Wiley & Sons, 1977);
D. Braybrooke and C. E. Lindblom, A Strategy of Decision: Policy Evaluation as a Social Process (New York: Free Press of Glencoe, 1963);
C. E. Lindblom, The Policy-Making Process (Englewood Cliffs, NJ: Prentice-Hall, 1968);
W G. Bennis, Changing Organizations: Essays on the Development and Evolution of Human Organizations (New York: McGraw-Hill, 1966).
5. See respectively:
Quinn (Fall 1977);
Quinn (Fall 1978).
6. See J. B. Quinn, Xerox Corporation (B) (copyrighted case, Amos Tuck School of Business Administration, Dartmouth College, Hanover, NH, 1979).
7. See O. G. Brim, D. Glass et al., Personality and Decision Processes: Studies in the Social Psychology of Thinking (Stanford, CA: Stanford University Press, 1962).
8. Crises did occur at some stage in almost all the strategies investigated. However, the study was concerned with the attempt to manage strategic change in an ordinary way While executives had to deal with precipitating events in this process, crisis management was not — and should not be — the focus of effective strategic management.
9. For some formal approaches and philosophies for environmental scanning, see:
W. D. Guth, “Formulating Organizational Objectives and Strategy: A Systematic Approach,” Journal of Business Policy (Autumn 1971): 24–31;
F J. Aguilar, Scanning the Business Environment (New York: Macmillan Co., 1967).
For confirmation of the early vagueness and ambiguity in problem form and identification, see H. Mintzberg, D. Raisinghani, and A. Théorêt, “The Structure of 'Unstructured' Decision Processes,” Administrative Science Quarterly (June 1976): 246–275.
10. For a discussion on various types of “misfits” between the organization and its environment as a basis for problem identification, see Normann (1977), p. 19.
11. For suggestions on why organizations engage in “problem search” patterns, see R. M. Cyert, H. A. Simon, and D. B. Trow, “Observation of a Business Decision,” The Journal of Business (October 1956): 237–248;
For the problems of timing in transitions, see L. R. Sayles, Managerial Behavior: Administration in Complex Organizations (New York: McGraw-Hill, 1964).
12. For a classic view of how these screens operate, see C. Argyris, “Double Loop Learning in Organizations,” Harvard Business Review, September–October 1977, pp. 115–125.
13. See Quinn (copyrighted case, 1979).
14. Cyert and March (1963) suggest that executives choose from a number of satisfactory solutions; later observers suggest they choose the first truly satisfactory solution discovered.
15. See F F. Gilmore, “Overcoming the Perils of Advocacy in Corporate Planning,” California Management Review (Spring 1973): 127–137.
16. See J. B. Quinn, General Motors Corporation: The Downsizing Decision (copyrighted case, Amos Tuck School of Business Administration, Dartmouth College, Hanover, NH, 1978).
17. See E. Rhenman, Organization Theory for Long-Range Planning (New York: John Wiley & Sons, 1973), p. 63. Here author notes a similar phenomenon.
18. See Quinn (copyrighted case, 1978).
19. See R. M. Cyert, W R. Dill, and J. G. March, “The Role of Expectations in Business Decision Making,” Administrative Science Quarterly (December 1958): 307–340. The authors point out the perils of top management advocacy because existing polities may unconsciously bias information to support views they value.
20. See J. H. Dessauer, My Years with Xerox: The Billions Nobody Wanted (Garden City, NY: Doubleday, 1971).
21. See:
H. Mintzberg, The Nature of Managerial Work (New York: Harper & Row, 1973). Note that this “vision” is not necessarily the beginning point of the process. Instead it emerges as new data and viewpoints interact; Normann (1977).
22. See Mintzberg, Raisinghani, and Théorêt (June 1976). Here the authors liken the process to a decision tree where decisions at each node become more narrow, with failure at any node allowing recycling back to the broader tree trunk.
23. Wrapp (September–October 1967) notes that a conditioning process that may stretch over months or years is necessary in order to prepare the organization for radical departures from what it is already striving to attain.
24. See J. G. March, J. P. Olsen, S. Christensen et al., Ambiguity and Choice in Organizations (Bergen, Norway: Universitetsforlaget, 1976).
25. See:
T A. Wise, “I.B.M's $5 Billion Gamble,” Fortune, September 1966, pp. 118–124;
T. A. Wise, “The Rocky Road to the Marketplace (Part II:I.B.M's $5 Billion Gamble),” Fortune, October 1966, pp.138–152.
26. For an excellent overview of the processes of co-optation and neutralization, see Sayles (1964); For perhaps the first reference to the concept of the “zone of indifference,” see C. I. Barnard, The Functions of the Executive (Cambridge, MA: Harvard University Press, 1938);
The following two sources note the need of executives for coalition behavior to reduce the organizational conflict resulting from differing interests and goal preferences in large organizations:
Cyert and March (1963);
J. G. March, “Business Decision Making,” in Readings in Managerial Psychology, H. J. Leavitt and L. R. Pondy, eds. (Chicago: University of Chicago, 1964).
27. Cyert and March (1963) also note that not only do organizations seek alternatives but that “alternatives seek organizations” (as when finders, scientists, bankers, etc., bring in new solutions).
28. See March, Olsen, Christensen et al. (1976).
29. Much of the rationale for this approach is contained in J.B. Quinn, “Technological Innovation, Entrepreneurship, and Strategy,” Sloan Management Review, Spring 1979, pp. 19–30.
30. See C. Argyris, “Interpersonal Barriers to Decision Making,” Harvard Business Review, March–April 1966, pp. 84–97. The author notes that when the president introduced major decisions from the top, discussion was “less than open” and commitment was “less than complete,” although executives might assure the president to the contrary.
31. See March (1964).
32. The process tends to be one of eliminating the less feasible rather than of determining a target or objectives. The process typically reduces the number of alternatives through successive limited comparisons to a point where understood analytical techniques can apply and the organization structure can function to make a choice. See Cyert and March (1963).
33. For more detailed relationships between authority and power, see: H. C. Metcalf and L. Urwick, eds., Dynamic Admninistration: The Collected Papers of Mary Parker Follett (New York: Harper & Brothers, 1941);
A. Zaleznik, “Power and Politics in Organizational Life,”Harvard Business Review, May–June 1970, pp. 47–60.
34. See. J. D. Thompson, “The Control of Complex Organizations,” in Organizations in Action (New York: McGraw-Hill, 1967).
35. See G. T Allison, Essence of Decision: Explaining the Cuban Missile Crisis (Boston: Little, Brown and Company, 1971).
36. See C. E. Lindblom, “The Science of 'Muddling Through,” Public Administration Review (Spring 1959): 79–88. The author notes that the relative weights individuals give to values and the intensity of their feelings will vary sequentially from decision to decision, hence the dominant coalition itself varies with each decision somewhat.
37. Zaleznik (May–June 1970) notes that confusing compliance with commitment is one of the most common and difficult problems of strategic implementation. He notes that often organizational commitment may override personal interest if the former is developed carefully.
38. See A. D. Chandler, Strategy and Structure: Chapters in the History of the Industrial Enterprise (Cambridge, MA: MIT Press, 1962).
39. See K. J. Cohen and R. M. Cyert, “Strategy: Formulation, Implementation, and Monitoring,” The Journal of Business (July 1973): 349–367.
40. March (1964) notes that major decisions are “processes of gradual commitment.”
41. Sayles (1964) notes that such decisions are a “flow process” with no one person ever really making the decisions.
42. See J. M. Pfiffner, “Administrative Rationality,” Public Administration Review (Summer 1960): 125–132.
43. See R. James, “Corporate Strategy and Change — The Management of People” (monograph, The University of Chicago, 1978). The author does an excellent job of pulling together the threads of coalition management at top organizational levels.
44. See Cyert and March (1963), p. 115.
45. Lindblom (Spring 1959) notes that every interest has a “watchdog” and that purposely allowing these watchdogs to participate in and influence decisions creates consensus decisions that all can live with. Similar conscious access to the top for different interests can now be found in corporate structures.
46. See Zaleznik (May–June 1970).
47. For an excellent view of the bargaining processes involved in coalition management, see Sayles (1964), pp. 207–217.
48. For suggestions on why the central power figure in decentralized organizations must be the person who manages its dominant coalition, the size of which will depend on the issues involved, and the number of areas in which the organizations must rely on judgmental decisions, see Thompson (1967).
49. Wrapp (September–October 1967) notes the futility of a top manager trying to push a full package of goals.