4 MIN. READ
Changing the shape of a company is an intangible thing, the office can look the same, the same people can sit in it but the way the company operates can be completely different. When a threatful situation endangers the continuity of the company, this non-physical aspect of organizational change is what makes it hard to start and, later, assess. To effectively begin this process, three important elements must exist:
- incentive to change
- open vertical and horizontal communication
- strong sense of urgency
If there is a lack of one of those, the actions taken will likely turn out to be unsuccessful.
Communication is the key
No major change will be possible when the entire crew isn’t on it. Open channels of communication can quickly spread the information about the new direction the company is to follow, and make suggestions about the improvements or areas that need them much clearer. These channels will only function properly when the preexisting company culture allows for them, when the workers keenly support each other, share ideas, and are not afraid to speak their minds to their supervisors when they notice a threat or wrongdoing. The management should always value employees’ input, suggestions or opinions, even when they don’t exactly solve the existing problems. A good manager knows that their perspective can be far different from the perspective of the employees. Even when their input isn’t particularly useful, it can still be valuable as it reflects what the workers think, how they perceive the actions of the management, and makes a field for a discussion and clarification of some issues.
Difficulties arise when members of the company are unable or unwilling to share their concerns with others. To see why they would be hesitant to voice their opinions, we need to take a look at organizational culture. Jay Barney, an American professor in strategic management, defined it as: “complex set of values and beliefs, assumptions and symbols that define the way in which a firm conducts its business”. While it is extremely useful in integration of the personnel, and adapting to the existing market environment, it also creates a great inertia in respect to change. A company develops its culture in a sort of evolutionary process as a mean of making the best fit to the external environment. Culture is a state of natural internal equilibrium. Another management researcher, Edgar Schein argued that “problems of external adaptation are those that ultimately determine the group’s survival in the environment. While a part of the group’s environment is enacted, in the sense that prior cultural experience predisposes members to perceive the environment in a certain way and even control that environment to an extent.” As the adaptation to the environment has initially proven to be beneficial, people may be unwilling to suddenly forget and exchange these rules. They may also refuse to change their habits and ways of thinking about their work. This resembles a different definition of culture provided by the creator of cultural dimensions theory - Geert Hofstede: “a collective mental programming of the people in an environment.” Human brains like to operate in a specific framework and approach problems in a well-established way. Culture only reinforces this by creating the whole entity based on these principles. Hofstede continues: “Culture is often difficult to change; if it changes at all, it does so slowly. This is so not only because it exists in the minds of the people but, if it is shared by a number of people, because it has become crystallized in the institutions these people have built together.”
This showcases how deep the changes must reach to affect the entire structure of the organisation, and how strong the need for them must be to begin the process.
Hollola Roll Finishing example
While Hollola Roll Finishing is most definitely not a company from the IT/tech industry, it is a great example to illustrate these principles in real life.
So, Hollola Roll Finishing, a division of Valmet Oy, was given an ultimatum - they either work out a profit in 12 months or get shut down. A new, enthusiastic manager, Kari Nettamo, was hired to implement the necessary changes. A series of meetings with the staff were conducted where all 90 members of the company were exchanging their observations and ideas for two days. During that time, a new process of allocating a project team to each new customer was established. The teams had a wide autonomy, as the clients were exclusive to them throughout the entire process - from initial order to delivery. This allowed them to provide consistent and well-suited service, and easily resolve internal conflicts. This strategy has proven to be successful, in 18 months Hollola Roll Finishing became the most profitable part of the company.
All three elements mentioned at the beginning of the article were clearly present in this example. If you’re interested in more specifics of the process, a study conducted by Blackmon and Boynton (1994) in Hollola Roll Finishing describes them in detail. These elements are not the prescription for a successful change, they are only prerequisite to make that change possible. They must be accompanied by a force that will put everything to life – leadership. References: Barney, J. (1986). Organizational Culture: Can It Be a Source of Sustained Competitive Advantage? The Academy of Management Review, 11(3), 656-665. Retrieved from www.jstor.org/stable/258317 Blackmon K. General Management lecture, Said Business School, University of Oxford Blackmon and Boynton (1994) Hollola Roll Plant Study Hofstede, G., 1980. Motivation, leadership, and organization: Do American theories apply abroad? Organizational Dynamics, 9(1), pp.42–63. Schein, E.H., 1984. COMING TO A NEW AWARENESS OF ORGANIZATIONAL CULTURE. Sloan management review, 25(2), pp.3–16.