CHANGING ORGANIZATIONS...

General Motors, IBM, and Sears: Three companies facing a need for dramatic change that have already tried, but failed, at major change efforts. The most important idea of all for companies like GM, IBM, and Sears is that those pushing for organizational improvement--whether they are external members of the board, major investors, or top executives--must deal with cultural and behavioral obstacles to change. Specifically, attempts at organizational change must consider three key features of organizational life: the firm's culture, the leadership of the change effort, and the existing network of power. The key point here is that rather than changing culture directly, management must work with and through the existing culture to transform the organization. Whether the culture itself changes is secondary; the important objective is to improve the company.

One of the discussions of organizational culture to reveal (1) the role of leadership in dealing with culture and (2) the form that leadership needs to take. There is a need to consider organizational power in organizational change efforts. Goals are accomplished in organizations largely through the use of power and politics, so it seems fairly obvious that changing an organization also requires their intelligent use.

Organizational culture was the hot topic of the management literature of the 1980s. New techniques for assessing and changing culture appeared in the organization development (OD) field, and a wide range of consultants on culture appeared almost overnight (some promising to change a firm's culture almost as fast).

A key finding here comes from a study performed by Geert Hofstede and his associates (1990), who examined organizational culture in 20 units of ten organizations in Denmark and the Netherlands. They found that differences among the cultures could be explained by the practices employees of each firm said they shared in common (similar to what Schein called "artifacts"). Hofstede et al. further concluded that differences among organizational cultures can be described by focusing on very few--perhaps only six to eight--dimensions of organizational practice. Two key dimensions they found were the extent to which the culture was employee- versus job-oriented and whether it was process- or results-oriented.

Assessing a firm's culture is not the same as changing it. Furthermore, it cannot be changed by top management. Note that the most recent attempts to change GM and IBM involved pressure from outside board members to replace top management teams. GM's team was from the Roger Smith school, and IBM's had come up through the "mainframe" ranks. It's too early to say, but bringing in new top management teams---with new interactions and relationships--may be what is needed to turn those two companies around. The influence of outsiders--the firm's environment--is further highlighted in a study by George Gordon (1991). He concluded that the basic assumptions and values of business organizations are influenced substantially by three outside factors: customer requirements, the competitive environment, and societal expectations. Organizations facing dynamic and complex competitive environments can be successful with cultures that are flexible and adaptable. U.S. auto makers have known for some time now that they face this type of environment and must change accordingly (note Chrysler's efforts in recent years to downsize). Companies in the high-technology area, facing rapidly changing consumer demands, support cultures that call for risk-taking and individual initiative. Intel's culture has shown recognition of this idea since the company's inception.