strategic transformation

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Definition

... or transformation of the firm.

Pettigrew's View -- ""There is no pretence to see strategic change as a rational analytical process of analysing environments, resources, and gaps, revealing and assessing strategic alternatives, and choosing and implementing carefully analysed and well thought through outcomes (Andrews, 1971; King and Cleland, 1978). Rather, in the manner of Bower (1970), Mintzberg (1978) and Burgelman (1983) the transformation of the firm is seen as an iterative, multilevel process, with outcomes emerging not merely as a product of rational or boundedly rational debates, but also shaped by the interests and commitments of individuals and groups, the forces of bureaucratic momentum, gross changes in the environment, and the manipulation of the structured context around decisions. Taking this view the focus of attention is on seeing change as a multilevel and continuous process in context, where leadership is expressed through understanding and tactical skill as well as the purposive force of mobilizing often imprecise and inarticulate visions, which are used to challenge dominating beliefs and institutional arrangements."" (Pettigrew, 1987, pp 658).

Scope and Substance of Strategy -- Contextualist and processual transformation research (Pettigrew, 1987, pp, 655 - 660) --
Leadership and change -- If we start with the premise that leadership and action are important, need we also drift into the assumption that human history and social change are about chaps and nothing else? Gellner's (1973) view is that history is about chaps, but he is quick to point out that it does not follow that its explanations are always in terms of chaps. Societies are what people do, but social scientists are not biographers en grand serie. So we are drawn into deep questions about the content of change under investigation; the models of man and theory or theories of process being used; the time frame of the analysis; a need to examine action and structure and explain continuity and change, together with a requirement to explore exogenous and endogenous sources of change. All this takes us well away from any simple-minded link between leadership and change.

Strategic transformation factors -- focusing on the behaviour of so called transformational leaders may prematurely disable research on strategic change from producing the kind of practical theory we are seeking to generate. The approach in this article, therefore, is to conceptualize major transformations of the firm in terms of linkages between the content of change and its context and process and to regard leadership behaviour as a central ingredient but only one of the ingredients, in a complex analytical, political, and cultural process of challenging and changing the core beliefs, structure, and strategy of the firm.

Context -- The issue is not prematurely to downplay the explanatory role of leadership behaviour in any theory of strategic change but to address questions about leadership within a sufficiently broad analytical approach. This means treating leadership as a continuous process in context; where context refers to the antecedent conditions of change, the internal structure, cultural, and political context within which leadership occurs, as well as broad features of the outer context of the firm from which much of the legitimacy for change is derived.

Contextualist approach to change -- A contextualist analysis of a process such as leadership and change draws on phenomena at vertical and horizontal levels of analysis and the interconnections between those levels through time. The vertical level refers to the interdependencies between higher or lower levels of analysis upon phenomena to be explained at some further level; for example, the impact of a changing socioeconomic context on features of intraorganizational context and interest-group behavior. The horizontal level refers to the sequential interconnectedness among phenomena in historical, present, and future time. An approach that offers both multilevel, or vertical and processual, or horizontal, analysis is said to be contextual in character. Any wholly contextual analysis would have the following characteristics:

  1. Clearly delineated but theoretically and empirically connectible set of levels of analysis. Within each level of analysis is a specified set of cross-sectional categories.
  2. A clear description of the process or processes under examination. Basis to the notion of a processual analysis is that an organization or any other social system may profitably be explored as a continuing system with a past, present, and future. Sound theory must take into account the history and future of a system and relate them to the present. The process itself is seen as continuous, interdependent sequence of actions and events that is being used to explain the origins, continuance, and outcome of some phenomenon. At the level of the actor, the language of process is most obviously characterized in terms of the verb forms interacting, acting, reacting, responding, and adapting, while at the system level, the interest is in emerging, elaborating, mobilizing, continuing, changing, dissolving, and transforming. The focus is on the language systems of becoming rather than of being -- of actors and systems in motion.
    Any processual analysis of this form requires as preliminary the set of cross-sectional categories identified in point 1 above. Change processes can be identified and studied only against a background of structure or relative constancy. Figure needs ground. (see figure-ground.
  3. The processual analysis requires a motor, or theory or theories, to drive the process, part of which will require the specification of the model of human beings underlying the research. Within this research on change, strong emphasis is given both to people's capacity and desire to adjust social conditions to meet their ends and to the part played by power relationships in the emergence and ongoing development of the processes being examined.
  4. Crucial to this whole approach to contextualist analysis is the way that the contextual variables in the vertical analysis are linked to the processes under observation in the horizontal analysis. The view taken here is that it is not sufficient to treat context either just as descriptive background or an eclectic list of antecedents that somehow shape the process. Neither, of course, given the dangers of simple determinism, should structure or context be seen as just constraining process. Rather, this approach recognizes that processes both are constrained by structures and shape structures, either in the direction of preserving them or in altering them. In the past, structural analyses emphasizing abstract dimensions and contextual constraints have been regarded as incompatible with processual analyses stressing action and strategic conduct. Here an attempt is made to combine these two forms of description and analysis, first of all, by conceptualizing structure and context not just as a barrier to action but as essentially involved in its production (Giddens, 1979; Ranson, Hinings, and Greenwood, 1980) and, secondly, by demonstrating how aspects of structure and context are mobilized or activated by actors and groups as they seek to obtain outcomes important to them.

Contextualist inquiry -- strategic change or major transformation questions involve those about the content, context, and process of change, together with the inter-connections between those three broad analytical categories. The starting point of this analysis of strategic change is the notion that formulating the content of any new strategy inevitably entails managing its context and process. Outer context refers to the social, economic, political, and competitive environment in which the firm operates. Inner context refers to the structure, corporate culture, and political context within the firm through which ideas for change have to proceed. Content refers to the particular areas of transformation under examination. Thus the firm may be seeking to change technology, manpower, products, geographical positioning, or indeed corporate culture. The process of change refers to the actions, reactions, and interactions from the various interested parties as the seek to move the firm from its present to its future state. Broadly speaking, --

  • the what of change is encapsulated under the label of content,
  • much of the why of change is derived from an analysis of inner and outer context, and
  • the how of change can be understood from an analysis of process

Strategic change views -- There is no pretense to see strategic change as a rational analytical process of analyzing environments, resources, and gaps, revealing and assessing strategic alternatives, and choosing and implementing carefully analyzed and well thought through outcomes (Andrews, 1971; King and Cleland, 1978). Rather, in the manner of Bower (1970), Mintzberg (1978), and Burgelman (1983) the transformation of the firm is seen as an iterative, multilevel process, with outcomes emerging not merely as a product of rationally bounded debates, but also shaped by the interests and commitments of individuals and groups, the forces of bureaucratic momentum, gross changes in the environment, and the manipulation of the structural context around decisions.

Taking this view, the focus of attention is on seeing change as a multilevel and continuous process in context, where leadership is expressed through understanding and tactical skill as well as the purposive force of mobilizing often imprecise and inarticulate visions, which are used to challenge dominating beliefs and institutional arrangements.

Explanations of change have to be able to deal with continuity and change, actions and structures, endogenous and exogenous factors, as well as the role of chance and surprise. Although there is force in Poggi's (1965, pp 284) stricture 'that a way of seeing is a way of not seeing', there is also a trap in trying to be overly eclectic, trying to see everything and thus to see nothing.

Politics and culture -- Political and cultural elements has real power in explaining continuity and change. The interest in culture directs attention to sources of coherence and consistency in organizational life, to the dominating beliefs or ideologies which provide the systems of meaning and interpretation which filter in and filter out environmental and intra-organizational signals. The recognition that culture can shape and not merely reflect organizational power relationships directs attention both to the ground rules which structure the character of political processes in the firm, and the assumptions and interests which powerful groups shield and lesser groups may only with fortitude challenge.

Legitimacy -- The acts and processes associated with politics as the management of meaning represent conceptually the overlap between a concern with the political and cultural analyses of organizations. A central concept linking political and cultural analyses essential to the understanding of continuity and change is legitimacy. The management of meaning refers to a process of symbol construction and value use designed to create legitimacy for one's ideas, actions, and demands, and to delegitimate the demands of one's opponents. If one sees strategic change processes at least partially as a contest about ideas and rationalities between individuals and groups, then the mechanisms used to legitimate and delegitimate particular ideas or broader ideologies are obviously critical in such an analysis. Equally well, the resolution of such contests about ideas need to be sensitive to questions of power and control in the firm.

Power -- Building on Lukes (1974) and Pfeffer (1981), Hardy (1985) has recently argued that a concern with power and control as explanations of strategic choice and change processes would in effect 'correspond to two uses of power. Power used to defeat competition in a choice or change process, and power used to prevent competition in a choice or change process. In both of these processes there would be an explanatory role for unobtrusive systems of power derived from the generation and manipulation of symbols, language, belief and ideology - from culture creation; and from the more public face of power expressed through the possession, control, and tactical use of overt sources of power such as position, rewards or sanctions, or expertise.

Structural biases -- There are two further essential points to derive from the above way of thinking about process. The first is that structures, cultures, and strategies are not just being treated here as neutral, functional constructs connectable to some system need such as efficiency or adaptability; those constructs are viewed as capable of serving to protect the interests of dominant groups. Thus the biases existing in structures and cultures can protect dominant groups by reducing the chances of challenge, and features of inner and outer context can be mobilized by dominant or aspiring groups to legitimate the existing order, or indeed to help create a new order. These points are as pertinent to understanding processes of strategic change as they are to achieving practical outcomes in strategic change. As Normann (1977, p. 161) has so aptly put it, 'the only way to bring about lasting change and to foster an ability to deal with new situations is by influencing the conditions that determine the interpretation of situations and the regulation of ideas'.

Summary -- The above political and cultural view of process gives a central place to the processes and mechanisms through which strategic changes are legitimated or delegitimated. The content of strategic change is thus ultimately a product of a legitimation process shaped by political/cultural considerations, though often expressed in rational/analytical terms. This recognition that transformation in the firm may involve a challenge for the dominating ideology, cultures, systems of meaning and power relationships in the organization, makes it clear why and how the processes of sensing, justifying, creating, and stabilizing major change can be so tortuous and long.

Necessity of ideological and political change -- Since business strategies are likely to be rooted in the idea systems that are institutionalized in an industry sector at any point of time (Grinyer and Spender, 1979; Huff, 1982) and are represented in the values, structures, and systems of powerful groups who control the firms in any sector, a change in business strategies has to involve a process of ideological and political change, which eventually releases a new concept of strategy that is ideologically acceptable within a newly appreciated context.

Strategic change as a learning process -- Because a precrisis era of ideological change represents a fundamental challenge to the dominating ideas and power groups of the organization, such eras of ideological challenge are often thwarted, sidetracked, or otherwise immobilized, leaving many who have attempted to champion new ideas faced with stereotyping as oddballs, moral entrepreneurs, or folk devils. Posed in this way, the development of strategic change in the firm takes on the character of a political learning process, a long-term conditioning and influence process designed to establish the dominating legitimacy of a different pattern of relation between strategic content, context, and process.

Building political momentum with change -- An important feature of managerial action in strategic change is the necessity to alter the structural content in which strategy changes are being articulated. These attempts to change inner context included the use of new ideological posturing to challenge traditional ways of thinking and acting, setting up management-development programmes to focus attention on the needs for new management capabilities and skills, and creating permanent and temporary changes in administrative mechanisms and working groups to build energy and commitment around particular problems and their solution. These activities did not occur in the ICI cases as part of some grand process design. Instead, opportunities were taken as they presented themselves to break any emerging global vision of a better future into manageable bits, to find small steps on the way to larger breaks, and to use any political momentum created by a number of complementary moves to bind a critical mass of powerful people around a set of principles that eventually would allow a series of pieces in the jigsaw to be moved simultaneously.

These processes required understanding and skill in intervening in the organization's structure, culture, and political processes. As Selznick (1957, p.70) has argued, 'a wise leader faces up to the character of his organization, although he may do so only as a prelude to designing a strategy that will alter it'. This kind of process management also necessitated patience and perseverance. It required waiting for people to retire to exploit any policy vacuum so created; introducing known sympathizers as replacements for known sceptics or opponents; using succession occasions to combine portfolios and responsibilities and integrate thought and action in an otherwise previously factious and deadlocked area of change; and backing off and waiting or moving the pressure point for change into another area where continuing downright opposition might have endangered the success of the whole change exercise.