After the slash-and-burn organizational restructuring of the past decade, one thing is becoming increasingly clear to managers: if a company is to proceed beyond the shrinking spiral of downsizing and rationalization to develop the ability of continuous self-renewal, its real battle lies not in reorienting the strategy, restructuring the organization, or revamping the systems, but in changing individual organization members’ behaviors and actions. A self-renewing organization can be built only on the bedrock of people who are willing to take personal initiative and to cooperate with one another, who have self-confidence and a commitment to the company, and who are able to execute relatively routine tasks with the same proficiency as they are willing to learn new skills and ways to take the company to the next stages of its ambition. In short, the most vital requirement for revitalizing businesses is to rejuvenate people.
What is not clear to many managers is whether it is possible to stimulate such behaviors in large global firms. Based on our recent research in twenty European, U.S., and Japanese companies, we believe that the answer is an unambiguous “yes.”1 A number of companies we studied demonstrated an ability to shape and protect the required individual attitudes and actions over decades, despite their growing size and diversity. We also found several in which a determined top management was able to recreate such behaviors in stale, tired organizations in a relatively short time.
3M, for example, has overcome the constraints of its humble roots as a sandpaper manufacturer to emerge as one of the world’s most consistently innovating companies. With a long-established objective of generating 25 percent of its sales from products introduced in the most recent five-year period, the company has grown from simple industrial abrasives to a portfolio of more than 100 technologies that it has leveraged into some 60,000 products sold through more than forty divisions and national subsidiaries in fifty countries. Rather than slowing the pace of innovation and renewal, CEO Desi DeSimone has recently increased the target for his $15 billion corporation to ensure that 30 percent of future sales comes from products introduced in the previous four years.
Through a very different self-renewing approach, Intel has managed not only to survive in one of the most demanding industries, but also to emerge as its leading competitor.
1. For a brief description of this study and some of its broad conclusions, see:
C.A. Bartlett and S. Ghoshal, “Changing the Role of Top Management: Beyond Strategy to Purpose,” Harvard Business Review, November–December 1994, pp. 79–88;
C.A. Bartlett and S. Ghoshal, “Changing the Role of Top Management: Beyond Structure to Processes,” Harvard Business Review, January-February 1995, pp. 86–96; and
C.A. Bartlett and S. Ghoshal, “Changing the Role of Top Management: Beyond Systems to People,” Harvard Business Review, May–June 1995, pp. 132–142.
2. What we describe as behavioral context is very akin to what has been described in the strategy process literature as organizational context. See:
J.L. Bower, Managing the Resource Allocation Process (Boston: Harvard University, Graduate School of Business Administration, Division of Research, 1970); and
R.A. Burgelman, “A Model of the Interaction of Strategic Behavior, Corporate Context, and the Concept of Strategy,” Academy of Management Review 8 (1983): 61–70.
Organizational theorists have preferred the labels of climate and culture. See:
E.H. Schein, Organizational Culture and Leadership (San Francisco: Jossey-Bass, 1985); and
R.D. Denison, Corporate Culture and Organizational Effectiveness (New York: John Wiley, 1990).
For a recent comparative review of these literatures, see:
D.R. Denison, “What Is the Difference between Organizational Culture and Organizational Climate? A Native’s Point of View on a Decade of Paradigm Wars” (Ann Arbor, Michigan: University of Michigan, School of Business Administration, mimeo, July 1993).
We choose the term “behavioral context” both to avoid what Denison has described as “paradigm wars” and also to emphasize the notion of a context in which individual behavior — “artifacts” in the terminology of Schein — is embedded. See:
E.H. Schein, “Does Japanese Management Style Have a Message for American Managers?,” Sloan Management Review, Fall 1981, pp. 55–68.
3. This decade-long history of ups and downs in Westinghouse has been chronicled in detail in the business press. The following insightful articles provide the basis for our analysis:
T.A. Stewart, “Westinghouse Gets Respect at Last,” Fortune, 3 July 1989, pp. 60–64;
P. Nulty, “Behind the Mess at Westinghouse,” Fortune, 4 November 1991, pp. 69–71;
M. Schroeder, “Westinghouse Gets a Big Dose of Reality,” Business Week, 17 February 1992, pp. 110–113;
S. Baker, “Westinghouse: More Pain Ahead,” Business Week, 7 December 1992, pp. 32–34;
M. Schroeder, “The Decline and Fall of Westinghouse’s Paul Lego,” Business Week, 8 March 1993, pp. 68–70; and
S. Baker, “Go Slow, Now That’s Radical,” Business Week, 24 January 1994, p. 28.
4. Chandler provides perhaps the clearest description of how control was the essential prerequisite for delegating responsibility in the divisionalized corporation. See:
A.D. Chandler, Strategy and Structure (Cambridge, Massachusetts, MIT Press, 1962).
5. For a rich analysis of the pathologies of the planning and control systems in large companies, see:
P.C. Haspeslagh, “Portfolio Planning Approaches and the Strategic Management Process in Diversified Industrial Companies” (Boston: Harvard Business School, unpublished dissertation, 1983).
6. Bower’s analysis of the resource allocation process provides a detailed description of how the “context” set by top management creates constraints at the level of front-line managers. See:
Bower (1970); and
7. Past research in the organizational behavior field has identified discipline as an important element of organizational climate. See, for example:
P. Amsa, “Organizational Culture and Work Group Behavior: An Empirical Study,” Journal of Management Studies 23 (1986): 347–362; and
G.G. Gordon and N. Di Tomaso, “Predicting Corporate Performance from Organizational Culture,” Journal of Management Studies 29 (1992): 783–798.
8. For a rich discussion on how a context of support influences the behaviors of organizational members, see:
R. Walton, “From Control to Commitment in the Workplace,” Harvard Business Review, March–April 1985, pp. 76–84.
9. The literature on organizational culture has consistently highlighted the importance of trust in stimulating both commitment and collaboration among employees. See, for example:
T.E. Deal and A.A. Kennedy, Corporate Cultures, the Rites and Rituals of Organizational Life (Reading, Massachusetts: Addison Wesley, 1982).
10. Hamel and Prahalad have recently emphasized the role of stretch in enhancing corporate performance. See:
G. Hamel and C.K. Prahalad, “Strategy as Stretch and Leverage,” Harvard Business Review, March–April 1993, pp. 75–87.
11. Whyte’s sociological study of life in the classic corporate hierarchy of the postwar decades provides a rich description of the kind of behavioral context such authority-based bureaucracies created. See:
W.H. Whyte, Jr., The Organization Man (New York: Simon & Schuster, 1956).