Restructuring strategy


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Restructuring strategy

  1. 1. Strategic change leadershipFiona GraetzBowater School of Management & Marketing, Deakin University, MelbourneCampus, Burwood, Victoria, AustraliaContext of the studyAgainst a backdrop of increasingglobalisation, deregulation, the rapid pace oftechnological innovation, a growingknowledge workforce, and shifting social anddemographic trends, few would dispute thatthe primary task of management today is theleadership of organisational change(Jackson, 1997; Stace and Dunphy, 1996;Kanter et al., 1992; Limerick and Cunnington,1993; Naisbitt and Aburdene, 1990; Ulrich andWiersema, 1989).Key words in the lexicon of the newlyemerging organisational model includenovelty, quality, flexibility, adaptability,speed, and experimentation. In view of theserequirements, the traditional organisationalstructure, with its hierarchical, top-downapproach, centralised control andhistorically entrenched values of stabilityand security, is an anachronism. Theimpetus now is towards flatter, more``flexible and agile organisational forms(Bahrami, 1992, p. 33) in which theboundaries are ``fluid and permeable(Useem and Kochan, 1992; Kanter et al., 1992).These changes have triggered a radicalshift in the role of senior managers from thetraditional authoritarian, command andcontrol style to a more open, participativemanagement style. With the emphasis nowon cooperation, collaboration andcommunication, managers need to hone acompletely different range of leadershipskills. Traditionally, managers focused onthe technical or operational dimension ofmanagement. However, to be effectiveleaders in an environment of change andflux, a second, interpersonal dimensionbecomes critical (Goleman, 1998; Javidan,1995). This suggests that change leadershipinvolves two roles:1 instrumental; and2 charismaticintegrating operational know-how withstrong interpersonal skills. While the tworoles perform distinctive functions, theycomplement and strengthen each other.Charismatic leadership is personalisedleadership and is underpinned by stronginterpersonal skills. It is crucial forenvisaging, empowering, and energisingfollowers. The key elements of instrumentalleadership are organisational design, controland reward which ``involves managingenvironments to create conditions thatmotivate desired behaviour (Nadler andTushman, 1990, p. 85), putting in place theenabling mechanisms that reinforce therequired new values way of working. Keydimensions of the charismatic andinstrumental roles include:. Challenging the status quo and creating a``readiness for change (Kouzes andPosner, 1995; Stata, 1992; Kotter, 1995;Tichy and Devanna, 1990).. Inspiring a shared vision and personallycommunicating the future direction withclear and honest answers to the what,why, and how questions. Not only must allemployees in the organisation ``find thegoal emotionally compelling, they mustalso clearly understand how they willcontribute to achieving that goal(Jackson, 1997; Hamel and Prahalad, 1994).. Creating additional sponsors at differentlevels of the organisation, involving asmany people as possible to buildcommitment.. Enabling others to act: by energising,empowering, building teams, providingtangible support with appropriateresources, and putting in place theappropriate systems and structures.. Symbolic and substantive actions: usingrewards and recognition to gain support;recognising short-term gains or successstories to emphasise recognition of thenew behaviours; and taking decisiveThe current issue and full text archive of this journal is available at[ 550 ]Management Decision38/8 [2000] 550±562# MCB University Press[ISSN 0025-1747]KeywordsStrategic management,Leadership, Distributed control,Instrumentalism,Organizational changeAbstractAgainst a backdrop of increasingglobalisation, deregulation, andthe rapid pace of technologicalinnovation, the primary task ofmanagement today is theleadership of organisationalchange. Seeks to examine the roleof leadership in managing thechallenge of deliberate large-scalechange and whether it is possibleto pinpoint factors that are criticalto leading change effectively. Alsoinvestigates the view thateffective change leadershipinvolves instrumental andcharismatic roles, integratingoperational know-how with stronginterpersonal skills. Uses aqualitative, case study approach,involving three multinationalcompanies operating in Australia.Cross-case analysis indicates thateffective change leadersrecognise the importance ofblending the charismatic andinstrumental dimensions ofchange leadership. The ability toconciliate and balance the tworoles depends primarily onwhether a leader possessescertain qualities and attributesrequired for effective changeleadership. Strong interpersonalskills permeate these key changeleadership qualities and attributesand provide the nexus betweenthe charismatic and instrumentalroles.
  2. 2. action in identifying and addressingresistance (Jackson, 1997; Useem andKochan, 1992; Kotter, 1995; Bertsch andWilliams, 1994; Kanter et al., 1992;Johnson, 1992, 1990).. Modelling the way: enacting the newbehaviours in deeds as well as in words;personally demonstrating seniormanagement involvement andcommitment. The involvement of seniormanagement is seen as fundamental to thesuccess of the transformation process(Kotter, 1995; Stata, 1992; Stace andDunphy, 1996; Kanter et al., 1992; Nadleret al., 1995; Bertsch and Williams, 1994;Blumenthal and Haspeslagh, 1994).. With the help of key stakeholders,communicating the message repeatedlyup, down and across the organisation toensure the momentum and enthusiasm forchange is not diminished over time.Communication by top management isseen as a powerful lever in gainingcommitment and building consensus torequired change. Successfulimplementation occurs in companieswhere executives ``walk the talk,teaching new behaviours by example(Kouzes and Posner, 1995; Kotter, 1995;Kanter et al., 1992; Hambrick andCannella, 1989).A qualitative, case study approach was usedto examine the change leadership style atthree organisations ± Pilkington Australasia,Ford Plastics, and Ericsson Australia ±against the ``critical roles outlined aboveand consider how they contributed to theoutcome of the change process. A series ofsemi-structured interviews using open-endedquestions was conducted on-site and ranfrom one to two hours. Interview transcriptswere forwarded to all participants forcomment. Follow-up calls and secondinterviews were conducted with someparticipants. Further data were obtainedfrom documents made available to theresearcher; published literature; andin-house publications.Pilkington AustralasiaPilkington Australasias core business wasthe manufacture, secondary processing anddistribution of flat and safety glass, coatedglass mirror and ceramically decorated glass.The bulk of its products were sold to thedomestic market, its main customers beingthe automotive, building and constructionindustries.From the beginning of the 1990s, Pilkingtonfound itself operating in an increasinglyuncertain, hostile environment. The newpriorities were increased flexibility andresponsiveness to customer demands whichPilkingtons autocratically controlleddivisional structure could not provide. Withthe collapse of its client industries as a resultof the recession in the early 1990s, Pilkingtonmoved to consolidate its position and focuson its core business of manufacturing,secondary processing and wholesaledistribution. The companys immediateresponse to the dramatic changes in itsexternal environment, therefore, was toembark on large-scale restructuring anddownsizing in a bid to increase operationalefficiencies and reduce costs.Between 1992 and 1994, the companysprogramme of change evolved fromimproving operations to redefining businessstrategy and culture. The externalappointment of a new general manager,human resources (HR), and the developmentof a new vision for ``world class glass,symbolised the true beginning of corporatetransformation at Pilkington. Managementsought to fulfil the new commitment to``excellence in customer service to beachieved through product quality, speed ofdelivery and flexibility in meeting customerdemands through operationalimprovements. It began by dismantling theold hierarchical structure, along with its top-down management style, redefining skillsand responsibilities, and redesigning workprocesses. With the support and commitmentof the management executive, the companymoved to establish team-based work groupsand aimed to develop a participativemanagement style within an open, learningenvironment.Creating a capacity for changePilkington Australasias senior managementhad no need to manufacture any sense ofurgency when its business nose-dived withthe collapse of its three major clientindustries as a result of the recession in 1990.Initially, however, while the traditionalcommand-and-control bureaucracy was stillfirmly in place, the potency of this crisis as amajor vehicle for communicating the needfor change was unrealised. As a result, whilethe workforce was well aware that thecompany was experiencing difficulties, it wasunprepared for the initial merging ofbusinesses and rationalising of the workforcewhich followed.All this changed with the appointment in1992 of a new general manager, HR. Hisappointment confirmed that organisationalchange was a top priority on the managementagenda and was a public admission by senior[ 551 ]Fiona GraetzStrategic change leadershipManagement Decision38/8 [2000] 550±562
  3. 3. management of the difficulties confrontingPilkington. The symbolic ``new blood alsohelped rekindle a sense of urgency byimmediately moving to dismantle the oldorder with its hierarchically focuseddivisional structure and autocraticmentality.Creating a vision and setting the directionThe new general manager, HR, aware of theimportance of communicating a clearlyarticulated, meaningful message, met withthe management executive to develop a newvision for ``world class glass, as well as amission and statement of values andcommitment. Pilkington attempted to givesubstance to this message by conducting face-to-face workshops, producing writtenmaterial for display as well as distributionand providing each employee with astatement of the revised corporatephilosophy and statement of values (seeAppendix I and Appendix II). However, if anorganisation wants to influence peoplesbehaviour directly, it must encourage ``hotmedia, where key personnel model the newbehaviours (Bertsch and Williams, 1994). Inthis regard, Pilkington encouraged leaders atdifferent levels of the organisation to showtheir commitment to the new organisationalparadigm by repeating its message andpursuing strategies which would helpinstitutionalise the new behaviours andvalues in their areas. Initially, it was clearthat not all leaders were pursuing this taskwith the appropriate amount of ``enthusiasmand vigour[1]. If successful implementationonly occurs in companies where executives``walk the talk (Bertsch and Williams, 1994;Hambrick and Cannella, 1989; Ulrich andWiersema, 1989), apathy among somebusiness leaders becomes a critical issue.Recognising that this was a serious problem,Pilkingtons training and development unitprovided on-the-job advice, and a three-partmanagement development programme wasimplemented.Leadership commitmentPilkington adopted a team approach to thetask of leading change. The managingdirector was not directly involved in sellingthe need for change through theorganisation. This was the principal task ofthe general manager, HR, with the backing ofthe managing director. However, althoughthere was no single figurehead, the key teamplayers were committed members of thesenior executive, not small bit actors. Thisaligns with the view that only topmanagement has the power to bring aboutmajor cultural change (Kotter, 1995; Bertschand Williams, 1994; Useem and Kochan, 1992).However, it remained to be seen whether theless direct involvement of key seniorexecutives, in particular the managingdirector, would be detrimental to the long-term success of corporate transformation atPilkington. In addition, Pilkingtonencountered some resistance among itsbusiness unit leaders who were less thanenthusiastic about altering old habits andsupporting new behaviours that wouldundermine their status and power base.Unless the management developmentprogramme succeeded in unlocking oldbehaviours, attitudes and values among itsmiddle and senior management, the messagefrom its ``guiding coalition would be seen asinconsistent and thus discredited.Communicating the messageUnder the guidance of the new generalmanager, HR, the company recognised theimportance of communicating the need forchange, not only at a senior level, but also,more critically, from the grassroots up.However, the concentration of efforts in thisregard, seemed to be towards ``cold media,with face-to-face workshops used at thebeginning to introduce staff to the newmission statement and statement of values.The company also needed to work hard atwinning over key personnel at the middlemanagement level and using them asmessengers for change. However, the lack ofpersonal involvement of top management inwalking the talk and modelling the newbehaviours appeared to create a vacuum atthe middle management level that was likelyto remain until this key group saw thecommitment of senior managers.Reinforcing and institutionalising the newbehavioursThe rewards at Pilkington clearly came tothose who were committed to moving to ateam-based, participative work model.Employees, through working partyrepresentatives, were involved for the firsttime in deciding the roles andresponsibilities of team members and therewards and incentives available to eachteam member. These were then built into theenterprise agreements and became the maindrivers of workplace reform. Examples ofrewards and incentives were bonuses tied toproductivity improvements, and employeetraining and accreditation to ensure a long-term career path.In addition, those businesses that haddeveloped the team model very effectivelywere held up as ``models of success to those``dragging their feet. Using models of success[ 552 ]Fiona GraetzStrategic change leadershipManagement Decision38/8 [2000] 550±562
  4. 4. to symbolise the opportunities of the neworder is a potent means of producingdissatisfaction with the status quo (Beer andWalton, 1990; Spector, 1989).Ford PlasticsFord Plastics was, until 1 July 1995, part ofFord Australia. The Plastics Plant, located inBroadmeadows, Victoria, comprised fourproduct areas:1 bumper bars;2 instrument panel;3 moulding; and4 climate control.Until the mid-1980s, the local car industryoperated in a highly-protected environment.However, the Federal Governments MotorVehicle Plan (the Button Plan), announced in1984, dramatically altered the rules ofcompetition which led to radicalrestructuring of the local automotiveindustry.In addition to the requirements of theButton Plan, a change in the charter of theFord Plastics Plant in 1990 from ``a maker ofhigh-tech engineering plastic bits andassemblies F F F to an engineering plasticsbusiness which was to develop othermarkets provided a heightened sense ofurgency to the need to improve the plantscompetitiveness.Tom Pettigrew, appointed manager atFord Plastics in early 1990, played a key rolein driving change at Ford Plastics.Pettigrew, who was trusted and respectedby staff on the shopfloor, implemented aquality-driven business strategy whichfocused on striving for quality andproductivity improvements through theestablishment of work area teams, multi-skilling, skills and knowledge education,the encouragement of learning, and aparticipative, open management style.Under his guidance, the ``Golden Rulebecame a core tenet of the fabric of changeat Ford Plastics. The ``Golden Rule statedthat all people who would contribute torealising a decision or plan, and thoseothers who would be affected by thedecision or plan, must participate in themaking of the decision or plan. To reinforcethe message, Pettigrew himself spent a lotof time ``showing by doing andencouraging other senior personnel to dothe same. The aim was to break down the``us and them mentality, to encourage thesharing of ideas, and to build a climate ofcooperation and trust. Pettigrew found akey ally and messenger for change in theinternally appointed manufacturingmanager, whose skills as a negotiator andfacilitator were recognised early on by thesenior executive. More importantly, he wasrespected and trusted by unionrepresentatives and shopfloor employees.Creating a capacity for changeThe Button Plan served as a catalyst forchange for the automotive industry as awhole. However, it took several years ofantagonism and confrontation betweenmanagement and the shopfloor at Ford beforeit became embarrassingly clear that, unlessboth sides adopted a more consultative,collaborative and conciliatory approach, itwas very likely there would be little left tofight over. The tripartite mission of 1988(Ford Australia, along with the other fourlocal car manufacturers, the vehicle industryunions and the Federal Government formed atripartite mission visiting car plants in theUSA, Germany, Japan and Sweden) served tohighlight the seriousness of the situation tothe workforce and also indicated the firstpublic representation of cooperation betweenmanagement, union and government. As aresult of its observations, the missionrecommended the automotive industryimplement a number of wide-rangingchanges for its employees. Further impetusto drive through these changes came fromthe award restructuring process thatcommenced in 1988. The emphasis was to beon consultation, cooperation andcollaboration.In addition, the change to the plantscharter in early 1990 fuelled the need forworkplace reform. It provided thegalvanising event to which an organisationmust respond (Kanter et al., 1992, p. 499).Senior management at Ford successfullyexploited this to create a sense of urgencyand provide a focus for redefining businessstrategy and work processes. Pettigrew, inparticular, recognised the need to instil asense of urgency in the majority of theworkforce if they were to succeed inachieving the goals set out under Fordsfour imperatives (see Appendix III). Theseprovided a statement of vision, articulatingwhat the company must strive to achievethrough its ``quality-driven businessstrategy if it was to meet the objectives ofthe Button Plan and fulfil therecommendations of the tripartite mission.Creating a vision and setting the directionUntil early 1990, staff morale at Ford Plasticswas at a low ebb: industrial unrest andabsenteeism were rife; senior managers, whowere rarely seen on the shopfloor, weredistrusted; and there was little overall[ 553 ]Fiona GraetzStrategic change leadershipManagement Decision38/8 [2000] 550±562
  5. 5. guidance and direction. Fords fourimperatives represented the companysblueprint for the future, but were of littlevalue if the workforce did not know whatthey meant or how to achieve them. With theimplementation of Ford Plastics QualityDriven Business Strategy (see Appendix IV),the newly appointed plant manager set out togive meaning and structure to the fourimperatives. By translating the fourimperatives into a message which made goodsense, he was instrumental in giving theworkforce a vision and purpose for change(Kotter, 1995; Stata, 1992; Beer and Walton,1990).Leadership commitmentPettigrew underlined the pivotal role topmanagement play in ensuring the long-termeffectiveness of corporate transformation.He became the ``magic leader at FordPlastics who gave purpose and meaning tothe change agenda and set the direction.Pettigrew modelled the leadershipbehaviour envisaged for the collaborative,empowered ``learning organisationnecessary for sustainable competitivesuccess (Limerick and Cunnington, 1993);Senge, 1990). He took on the role of coach,counsellor and teacher and actively createda climate for change (Whipp and Pettigrew,1993; Beer and Walton, 1990) by setting cleargoals and encouraging staff at all levels toshare ideas and be involved in decisionmaking. He also recognised the importanceof harnessing the support and commitmentof key leaders through the organisationwho would help him cascade the messageacross and down through the organisation(Beatty and Ulrich, 1991; Kotter 1990; Nadlerand Tushman, 1990).Communicating the messagePettigrew also epitomised thetransformational leader who clearly andforcefully communicates and dramatisesthe vision for change (Stace and Dunphy,1996, p. 151). He understood the importanceof harnessing a motivated and skilledworkforce and recognised that this couldnot be done from some remote corner ofhead office. With his key managers on-side,Pettigrew set out to show by doing. Theybecame the models of the new behaviours:they moved around the organisation,talking and listening to employees at alllevels, building up trust, demonstratingbelief in peoples abilities and enthusingand enabling them to play an active part inthe plants new quality-driven businessstrategy.Reinforcing the message andinstitutionalising the new behavioursRewards at Ford Plastics were closely tied toan employees involvement and participationin natural work groups (NWGs). These wereformed around specific work areas in theplant, for example, the instrument panel line.The size of NWGs varied from five to sevenpeople to 15. By the mid-1990s, about 35 teamswere up and running, of which nine or tencould be described as ``standalone. These``self-managed work groups (generally thesmaller NWGs) had responsibility for theirdaily work. They monitored their ownquality and group attendance; suggestedimprovements and requested design help;allocated tasks among team members at thebeginning of each shift, and ordered insupplies from the factory store.Natural work groups became the modusoperandi on the shopfloor at Ford Plastics.The establishment of NWGs, with theemphasis on multiskilling and the devolutionof authority and decision-making control,forced a radical redefinition of the roles andresponsibilities of senior management,supervisors, group leaders and groupmembers. The membership, structure andresponsibilities of natural work groups werenegotiated between management, union andemployee representatives and ultimatelyreinforced through enterprise agreements.The implementation of NWGs went hand inhand with the Vehicle Industry Certificate(VIC) programme. The nationally accreditedcertificate consisted of three levels oftraining, which included ``skill units and``knowledge units. At formal graduationdinners held twice a year for employees whocompleted all three levels, each graduate waspresented with a framed certificate. Theformality and ceremony attached to theseproceedings were deliberate. It helped tohighlight to employees that Fordmanagement regarded staff training anddevelopment as an integral part of the neworganisational paradigm; and it also publiclyrecognised and rewarded the achievementsof staff who successfully participated in theseprogrammes.Ericsson AustraliaUntil the late 1980s, competition within thetelecommunications industry wasnon-existent. Telecom Australia (nowTelstra) was the monopoly carrier andrepresented the bulk of Ericsson Australiasbusiness (some 60 per cent). However, asTelecom increasingly sought to expand itstechnology source, and with the deregulation[ 554 ]Fiona GraetzStrategic change leadershipManagement Decision38/8 [2000] 550±562
  6. 6. of the telecommunications industry in 1992,Ericsson found itself operating in a radicallyaltered environment.The appointment of a new managingdirector in 1991 symbolised a new beginningfor Ericsson. Recognising the need to create amore responsive, customer-oriented,competitive organisation, the new managingdirector effected significant changes to theorganisation structure. ``Improvementprojects were established throughout theorganisation as Ericsson attempted toincrease its competitiveness andresponsiveness through restructuring.However, while restructuring of the businessoccurred, peoples attitudes, beliefs andvalues had not changed. The majority ofEricsson staff doggedly adhered to theconservative, engineering mentality of thepast.In the second wave of change at Ericsson,senior management implemented two majorchange initiatives:1 a mission statement was drawn up whicharticulated in clear terms what Ericssonmust commit to; and2 the leading change programme wasdeveloped to equip leaders through theorganisation with the skills andknowledge to work differently and gavethem the tools to cascade these newbehaviours into their own business areas.It was only with this second phase thatEricsson clearly prepared its people forchange and focused the change agenda.Ericssons managing director, whodeliberately took on the change messengermantle articulated the ``future vision to keybusiness leaders. The commitment of middlemanagement to the leading change programwas largely credited to his role in``dimensioning the change (see Appendix V).The leading change programme set out tochallenge the traditional company values andbehaviours, and demonstrate through the useof mental models (see Appendix VI) howthese were no longer appropriate in the neworganisation. The reported use of thesemental tools suggested that a number of thesehad a considerable impact on the behavioursand attitudes of many participants and theiruse in the workplace grew more widespread.Creating a capacity for changeEricsson Australia demonstrated theenormous difficulties an organisation facesin trying to break down a singularlyentrenched corporate culture. Despite thegrowing realisation within the company thatit had to become more customer focused andmore sensitive to customer needs, there wasconsiderable resistance and littleunderstanding about how to respond to itsincreasingly competitive, ``customer-firstenvironment. If Ericsson was to succeed inchallenging the traditional, conservative,``black box mentality, the critical first step,creating the ``felt need for change, had to betranslated through the organisation clearlyand visibly.Ericsson neglected this crucial first step inthe first euphoric wave of improvementprojects, in which a plethora of changeactivities were initiated piecemeal with nodirection given on what needed to change orhow to change. By contrast, phase two ofEricssons change programme clearlyrecognised the importance of the shareddiagnostic process (Beer and Walton, 1990).The company attempted to create, andappeared to succeed in creating, a ``naturaltension (Senge, 1990, p. 9) by identifying,through its mission statement, thecompanys position at the time and whatchanges and improvements needed to berealised to take it to where it wanted to be.Videotaped interviews with customers whocommented frankly on Ericssonsshortcomings further impressed on businessleaders the gap between ``current reality and``potential future states (Stata, 1992; Senge,1990). The leading change programme alsosought to ``pump up key leaders through theorganisation by highlighting the eightdimensions of change that Ericsson had tocommit to if it wanted to continue inbusiness.Creating a vision and setting the directionFrom the failure of the first round ofimprovement projects in effecting anymeaningful organisation-wide change,management recognised that telling people tochange was not enough. They needed to knowwhat to change towards and to be given theskills and resources, which would allow themto behave and act differently. Ericssonsmission statement and the eight dimensionsof change set out to define clearly the futuredirection of the business and how this wouldaffect the roles and responsibilities oforganisational members and each businessarea.Leadership commitmentEricssons managing director deliberatelytook on the role of ``magic leader. Hispersonal involvement in the leading changeprogramme and adoption of the newbehaviours were seen as critical in winningthe support of key leaders through theorganisation. The leading change programmealso recognised that one individual could not[ 555 ]Fiona GraetzStrategic change leadershipManagement Decision38/8 [2000] 550±562
  7. 7. ``change a large and complex organisationsingle handed (Dunphy and Stace, 1993, p.166), but would need the commitment andsupport of capable leaders stationed atdifferent levels of the organisation.Communicating the message: ``walk thetalkThe managing director was directly involvedin communicating the change message to alllevels of the organisation. The support of the``guiding coalition he amassed was largelyattributed to his motivation and drive to seethe fulfilment of the cultural transformationprocess. In addition, the prime aim of themental models, to challenge currentorganisational attitudes and assumptions,forced a direct and frank interchangebetween managers and their line staff, whichdid not previously exist. This unique facet ofthe companys change programme gave allemployees graphic examples of what sorts ofbehaviours were expected of them and alsothe reasons why these behaviours would helpthem and the business.Reinforcing the message andinstitutionalising the new behavioursThe new organisational structure with theemphasis on the customer divisions as the``drivers of the business provided apowerful symbol of the new managementmodel and way of doing business atEricsson Australia. Reinforcing the newparadigm, Ericssons graduate recruitmentprogramme no longer focused solely on itstraditional engineering base. The detailedmission statement, the video documentingcustomer expectations and theirassessment of Ericsson, and the managingdirectors public commitment to the eightdimensions of change also sent strongsignals to employees about what wasaccepted behaviour. However, an in-housereview of outcomes indicated that somebusiness leaders were frustrated at the lackof support and cooperation from moresenior levels in overcoming resistance tochange at the operational level. To ensureongoing success, Ericsson needed to ensurethat appropriate support and controlmechanisms were in place to removepockets of resistance, which mightundermine the success of its changestrategies.ConclusionThe cross-case analysis reveals the pivotalrole change leadership plays in promotingand sustaining the change agenda. The roleof senior management is to ``set clearcorporate challenges that matter toeveryone on a personal level (Hamel andPrahalad, 1994). The personal involvementof senior management signals the level ofcommitment to change and heightens thesense of urgency for change. The need forstrong, personal leadership from the topthat provides a clear overarching visionand focus seems particularly critical asorganisations discard their traditional,hierarchical organisational structures infavour of leaner, flatter boundaryless formscomprising smaller, autonomous,networking units (Jackson, 1997; Bartlettand Ghoshal, 1995; Eccles, 1993; Limerickand Cunnington, 1993). Because of theautonomy and elasticity implicit in thedesign and working relationships of theseorganisations without walls, the linebetween ``loosely coupled and ``decoupledis easily overstepped (Bahrami, 1992;Hirschhorn and Gilmore, 1992).Organisations most successful in managingthe dynamics of loose-tight workingrelationships meld strong ``personalisedleadership at the top with ``distributedleadership, a group of experienced andtrusted individuals operating at differentlevels of the organisation (Butler et al., 1998;Handy, 1997; Jackson, 1997; Whipp andPettigrew, 1993). To lead change effectivelymeans acknowledging that senior managersdo not have all the answers andencouraging ``integrated thinking andacting at all levels (Senge, 1990, p. 7). Allthree cases illustrate how, if keystakeholders are not onside, particularly atthe middle and lower levels of management(e.g. Pilkington), they act as roadblocks tochange, impeding the passage of the changeprocess to those within their span of control(Kotter, 1995; Whipp and Pettigrew, 1993).The literature is unequivocal thatsuccessful transformation occurs incompanies where executives ``walk the talk.The success in particular of Pettigrew andhis guiding coalition at Ford Plasticsvindicates this view. Pettigrew wasconvinced that the only way he could win thesupport and commitment of the workforcewas ``showing by doing. The establishmentof the ``Golden Rule ensured that the newbehaviours were enacted in deeds as well asin words. At Ericsson, the importance of thepersonal involvement of Ericssonsmanaging director in communicating thenew behaviours was also highlighted. Thecommitment of middle management to theleading change programme was largelycredited to his role in ``dimensioning thechange. Pilkington, on the other hand,[ 556 ]Fiona GraetzStrategic change leadershipManagement Decision38/8 [2000] 550±562
  8. 8. encountered some resistance to change at themiddle and lower management levels thatappeared to hamper the change process. Thegeneral manager, HR, assumed the mantle ofchange messenger with the managingdirector giving his support from thesidelines. Addressing this lack of directinvolvement of the senior executive might bethe key to unlocking resistance at the middleand lower management levels.To ensure the success of organisationalchange over the long term, cross-caseanalysis highlights that change leadersneed to put in place mechanisms that willreinforce and institutionalise change.Integral to this are the establishment of neworganisational systems and structures thatrepresent the new work arrangements andreporting requirements (Kanter et al., 1992;Kets de Vries, 1994). In this respect,management has considerablediscretionary power to drive organisationalchange through the strategic use ofsymbolic and substantive actions.Ironically, the power of such mechanisms isoften undervalued (Jackson, 1997; Useemand Kochan, 1992; Kotter, 1995; Bertsch andWilliams, 1994; Kanter et al., 1992; Johnson,1992, 1990). At Ford, for example,recognition and rewards came to those whoclearly demonstrated their commitment tonatural work groups and participated in thevarious training courses. Staff whosuccessfully completed the formal VICcourses were publicly applauded andrewarded at formal graduation ceremoniespresided over by Fords president. Inaddition, the establishment of work areateams, multi-skilling, and the provision ofskills and knowledge education symboliseda radical departure from the structures andcontrol systems of the past. The delegationof power and authority to each work areateam symbolised a new organisationalparadigm at Ford Plastics. Pilkington,however, apparently underestimated theimportance of using its top managers tomodel the new behaviours and metresistance at the middle and lowermanagement levels. In contrast, Ericssonsleading change programme set out tochallenge the traditional company valuesand behaviours and demonstrate throughthe use of mental models how these were nolonger appropriate in the new organisation.All three organisations attempted toreinforce the new paradigm not onlythrough organisational restructuring, butalso by changing the roles andresponsibilities of personnel; andestablishing rewards and remunerationsappropriate to the new systems andstructures (Kotter, 1995; Useem andKochan, 1992; Nadler and Tushman, 1990).Case observations indicate thatsuccessfully implementing and sustainingthe momentum for organisation-widechange demands a long-term, strategicapproach, incorporating both ``hard(strategy, structure, systems andtechnology) and ``soft (vision, values,behaviours and attitudes) issues (Stace andDunphy, 1996: Kouzes and Posner, 1995;Whipp and Pettigrew, 1993). While eachcompany initiated the corporatetransformation process at the operationallevel, it became abundantly clear that, ifchange was to ``stick, they must learn toblend operational improvements withstrategic transformation and corporateself-renewal (Blumenthal and Haspeslagh,1994). The need for a two-pronged approachalso highlights the importance of blendingthe charismatic and instrumentaldimensions of change leadership.Table I attempts to encapsulate thedifferent aspects of the charismatic andinstrumental roles. The cross-case analysissuggests that charisma alone, or the powerof an individual personality, is not enoughto ensure lasting systemic change.However, effective change leaders use theenvisaging dimension of the charismaticrole to energise and enable (Nadler andTable ISummary of change leadership rolesCharismatic role Qualities and attributes Instrumental roleChange leadership mindset Honesty/integrity/trustworthy Management mindsetStrategic focus Inspiring Operational/technical focusSystemic/big picture focus Competent Business unit focusEnvisaging, energising High degree of emotional intelligence: Planning and controlConcern for shared values, attitudes, self-confidence/awareness, Concern for systems, structures andmotivating staff strong drive/energy to achieve openness to resource (human and physical)new ideas/changeaimprovementStrong interpersonal skillsSource: aGoleman, 1998, p. 95{ }[ 557 ]Fiona GraetzStrategic change leadershipManagement Decision38/8 [2000] 550±562
  9. 9. Tushman, 1990 p. 82) others operating atdifferent levels of the organisation tobecome involved in, and contributemeaningfully to, the change process. Inaddition, they must also create a nexusbetween the traditional technical oroperational dimension of management andthe strategic, interpersonal dimension. Theability to conciliate and balance the tworoles depends primarily on whether aleader possesses certain qualities andattributes (see Table I) required foreffective change leadership (Jackson, 1997;Kouzes and Posner, 1995). These qualitiesand attributes, that demarcate stronginterpersonal skills as a key bindingingredient, provide the nexus between thecharismatic and instrumental roles. Bymelding charisma and widespreadinvolvement with instrumental factors,that focus on developing roles,responsibilities, structures, systems andrewards, the critical building-blocks fordriving organisation-wide change are setfirmly in place.Note1 Italicised text in double quotes in all the casestudies represents quotes from interviewsources.ReferencesBahrami, H. (1992), ``The emerging flexibleorganisation: perspectives from SiliconValley, California Management Review,Vol. 34 No. 4, pp. 33-52.Bartlett, C.A. and Ghoshal, S. (1995), ``Changingthe role of top management: beyond structureto processes, Harvard Business Review,January-February, pp. 86-96.Beatty, R.W. and Ulrich, D.O. (1991),``Reenergizing the mature organisation,Organisational Dynamics, Vol. 20 No. 1,pp. 16-30.Beer, M. and Walton, E. (1990), ``Developing thecompetitive organisation: interventions andstrategies, American Psychologist, Vol. 45No. 2, pp. 154-216.Bertsch, B. and Williams, R. (1994), ``Howmultinational CEOs make change programsstick, Long Range Planning, Vol. 27 No. 5,pp. 12-24.Blumenthal, B. and Haspeslagh, P. (1994),``Toward a definition of corporatetransformation, Sloan Management Review,Spring, pp. 101-06.Butler, R.J., Price, D.H.R., Coates, P.D. and Pike,R.H. (1998), ``Organising for innovation: looseor tight control?, Long Range Planning,Vol. 31 No. 5, pp. 775-82.Dunphy, D. and Stace, D. (1993), Under NewManagement: Australian Organisations inTransition, McGraw-Hill Book Company,Sydney.Eccles, T. (1993), ``The deceptive allure ofempowerment, Long Range Planning, Vol. 26No. 6, pp. 13-21.Goleman, D. (1998), ``What makes a leader?,Harvard Business Review, November-December, pp. 93-102.Hambrick, D.C. and Cannella, A.A. (1989),``Strategy implementation as substance andselling, The Academy of ManagementExecutive, Vol. 3 No. 4, pp. 278-85.Hamel, G. and Prahalad, C.K. (1994), Competingfor the Future, Harvard Business SchoolPress, Boston, MA.Handy, C. (1997), ``New language of organising,Executive Excellence, May, pp. 13-14.Hirschhorn, L. and Gilmore, T. (1992), ``Thenew boundaries of the `boundarylesscompany, Harvard Business Review,May-June, pp. 104-15.Jackson, D. (1997), Dynamic Organisations: TheChallenge of Change, Macmillan Business,London.Javidan, M. (1995), ``Leading a high commitment,high performance organisation, in Sadler, P.(Ed.), Strategic Change: Building a HighPerformance Organisation, Elsevier Science,Oxford, pp. 33-47.Johnson, G. (1990), ``Managing strategic change;the role of symbolic action, British Journalof Management, Vol. 1, pp. 183-200.Johnson, G. (1992), ``Managing strategic change ±strategy, culture and action, Long RangePlanning, Vol. 25 No. 2, pp. 28-36.Kanter, R.M., Stein, B.A. and Jick, T.D. (1992), TheChallenge of Organisational Change, TheFree Press, New York, NY.Kets de Vries, M.F.R. (1994), ``The leadershipmystique, Academy of ManagementExecutive, Vol. 8 No. 3, pp. 73-89.Kotter, J.P. (1990), ``What leaders really do,Harvard Business Review, May-June,pp. 103-11.Kotter, J.P. (1995), ``Leading change: whytransformation efforts fail, Harvard BusinessReview, May-June, pp. 59-67.Kouzes, J.M. and Posner, B.Z. (1995), TheLeadership Challenge, Jossey-Bass, SanFrancisco, CA.Limerick, D. and Cunnington, B. (1993),Managing the New Organisation, Businessand Professional Publishing, Sydney.Nadler, D.A. and Tushman, M.L. (1990), ``Beyondthe charismatic leader: leadership andorganisational change, CaliforniaManagement Review, Winter, pp. 77-97.Nadler, D.A., Shaw, R.B. and Walton, A.E. (1995),Discontinuous Change: LeadingOrganisational Transformation, Jossey-Bass,San Francisco, CA.[ 558 ]Fiona GraetzStrategic change leadershipManagement Decision38/8 [2000] 550±562
  10. 10. Naisbitt, J. and Aburdene, P. (1990), Megatrends2000: Ten New Directions for the 1990s, AvonBooks, New York, NY.Pettigrew, T.J. (1991), ``Total quality managementat Ford Plastics plant, unpublished paper.Senge, P.M. (1990), ``The leaders new work:building learning organisations, SloanManagement Review, Fall, pp. 7-23.Spector, B.A. (1989), ``From bogged down to firedup: inspiring organisational change, SloanManagement Review, Summer, pp. 29-34.Stace, D. and Dunphy, D. (1996), Beyond theBoundaries: Leading and Recreating theSuccessful Enterprise, McGraw-Hill,Australia.Stata, R. (1992), ``A CEOs perspective in Kochan,T.A. and Useem, M. (Eds), TransformingOrganisations, Oxford University Press, NewYork, NY, pp. 377-80.Tichy, N.M. and Devanna, M.A. (1990), TheTransformational Leader, John Wiley & Sons,New York, NY.Ulrich, D. and Wiersema, M.F. (1989), ``Gainingstrategic and organisational capability in aturbulent business environment, TheAcademy of Management Executive, Vol. IIINo. 2, pp. 115-22.Useem, M. and Kochan, T.A. (1992), ``Creating thelearning organisation, in Kochan, T.A. andUseem, M. (Eds), TransformingOrganisations, Oxford University Press, NewYork, NY, pp. 391-406.Whipp, R. and Pettigrew, R. (1993), ``Leadingchange and the management of competition,in Hendry, J., Johnson, G. and Newton, J.(Eds), Strategic Thinking: Leadership and theManagement of Change, John Wiley & Sons,Chichester, pp. 199-228.Appendix I: Pilkington Australasia Limited, values and commitmentWe value and are committed to:. the vision of becoming world class;. integrity in our daily business;. dedication to meeting customer needs;. active pursuit of continuous innovation and improvement;. world standard excellence in business;. efficient use of resources to achieve our goals;. team approach as well as individual effort;. acquisition and retention of skills which result in superior performance.Source: in-house publication, 1995Appendix II: World class glassTable AIW O R L D& The customer ± we put the customer first ± always! We aim to focus on whatthey want ± product type, delivery and follow-up service. No customers ± nobusiness!& Continuous improvement ± always looking for the better way to do it.C L A S S& Commitment ± be passionate, be committed. A real desire to be the best, to beprofessional, to be dynamic.& Quality ± theres no substitute for total business quality in everything we do.G L A S S& The team effort ± were a team-based company, flexible, working together usingour collective skills and talents for the best results.& Be safe, not sorry! ± everyone is responsible for workplace safety. Be aware, becareful, and make workplace safety a habit.& Participation ± the new Pilkington involves all its employees more and more in making decisions.Consultation, listening and acting on input is an essential part of how we do business from now on.& Going international ± meeting international benchmarks, constantly on the alert for export opportunities.& Problem solving ± issues and problems are merely challenges to be met and solved. Turn problems intoopportunities.& Goals and vision ± knowing our plans, future directions and ambitions, and being able to measureperformance honestly and accuratelySource: Adapted from Pilkington company poster, 1995[ 559 ]Fiona GraetzStrategic change leadershipManagement Decision38/8 [2000] 550±562
  11. 11. Appendix III: Ford Plastics Australia, Fords four imperativesAppendix IV: Ford Plastics quality driven business strategyTable AIIFords four imperativesThe blueprint for the future1. Customer satisfactionWe need to better understand andsatisfy our customers needs by beingmore responsive to those in providingproducts which have continuousimprovement in design, quality andvalue for money.2. Working togetherWe must improve job satisfaction andemployee performance by workingtogether better.Our management style must encourageopenness, be two-way in communicationand reflect integrity.We must increase the opportunities for ouremployees to participate fully in the businessthrough team building, training, improved awardsystems, recognition of their abilities andimprovement of the safety and conditions of thework environment.3. Productivity and sales improvementWe must increase productivity markedly andimprove the overall efficiency of our business suchthat our sales are always strong enough to protectour profitability.We must establish our corporate reputation as thebest of the local manufacturers in terms of quality,value, technology, performance and design.4. Helping our dealers and suppliersWe must work closely with our dealers and suppliersto continuously improve our relationships and helpour suppliers to achieve their quality objectivesand our dealers to improve all aspects of theirbusiness.Figure A1.[ 560 ]Fiona GraetzStrategic change leadershipManagement Decision38/8 [2000] 550±562
  12. 12. Appendix V: Ericsson Australia, the eight dimensions of changeFigure A2.[ 561 ]Fiona GraetzStrategic change leadershipManagement Decision38/8 [2000] 550±562
  13. 13. Appendix VI: Examples of mental modelsApplication questions1 Is downsizing the most efficientstrategy? How should this change bemanaged?2 How do organizations instigate aprogramme of change when externalpressures are not immediately obvious?Figure A3.[ 562 ]Fiona GraetzStrategic change leadershipManagement Decision38/8 [2000] 550±562