Organization Theory:
Strategy Implementation
Process
Steven E. Phelan
July, 2006
STRATEGY EXECUTION:
Power, Culture, People
Overview
• Culture
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Hrebiniak, Chapter 8
Morgan, Chapter 5
Charan, “Culture change at Home Depot”
Case: “Culture change at Seagram”
• Power
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Hrebiniak, Chapter 9
Morgan, Chapter 6
Kramer “The great intimidators”
Case: “Donna Dubinsky”
• People
 Pfeffer “Competitive advantage through people”
Culture
Organizations as Cultures
• Culture: “the way we do things around here”
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National cultures
Regional cultures
Organizational cultures
Departmental cultures
• Culture…
 Is not homogenous
 Affects performance
 Is affected by peformance
Cultural metaphors
• How is culture like:
 A language, an iceberg, an onion, an
umbrella, or sticky glue?
 What else could be a metaphor for culture?
Exercise: Corporate cultures
• Take some time to share the following answers to
these questions about your organization with a
partner:
 What kinds of beliefs and values dominate your organization
(officially…unofficially)
 What are the main norms (do’s and don’ts)
 What are the dominant stories and rituals?
 What are the favorite topics of informal conversations?
 Think of three influential people in the organization. How do
they symbolize the character of the organization?
 Are there subcultures? Are they in conflict or harmony?
Debrief
• What struck you as abnormal or strange
about your partner’s answers? Why?
• What management challenges do you
think your partner’s organization might
present? How hard would it be to change
the culture?
• What are the implications for strategy
implementation?
Some key questions
Where does culture come from?
How is it sustained?
How do we create or change a culture?
Where does culture come from?
• Leadership (setting mission/vision)
 Selznick (1957) says purpose-setting is essence of leadership
• Shared values
 Religious groups, etc.
• Stories, legends, myths, symbols
• Reward systems
• Professional values
 e.g. engineers, doctors, accountants
• Historical accidents
• Morgan makes a big deal about enactment – what is it
and why is it important?
• Hegemony and ideology
 Indoctrination of masses, coalition with powerful
 Hrebiniak mentions “cultural due diligence” on new recruits
Changing a culture
• According to Hrebiniak:
 Don’t try to change attitudes, change behavior (and
attitudes will follow)
 Behavior doesn’t change easily in the face of requests
to do so. Requests are “useless and ineffective”.
• Change people, incentives, controls, processes, and structure
• “Get the right people on the bus”
• Changing incentives might even affect the “wrong people”
 Beware of excessive speed
• People must build a belief in the new culture
• Performance builds belief
• One change agent advocates manufacturing ‘short-term’ wins
 Can cultures and cultural change be measured?
Changing culture: A
comprehensive list
• trigger shifts in the established mindset
• breakdown habitual behavior patterns including
routines, structures and rewards
• move outside established information channels
• use data and analysis to shock people
• introduce new people and outsiders
• co-opt or break adversarial political alliances
• revamp employee communication mechanisms
• training and development
• use symbolism , ritual, and enactment
• reward new behavior, celebrate success
• provide leadership
Culture change at Home Depot
• How did Nardelli change Home Depot’s
culture
 Through the use of mechanisms to alter the
social interactions of people in the organization
• the ‘social architecture’
 By adding a “dose of discipline” to the
entrepreneurial culture
• With standardized metrics, disciplined talent reviews,
Monday morning conference calls, mapping the HR
process, learning forums, focus on accountability
 Was this a major achievement???
Strengths of the cultural metaphor
• Emphasizes the symbolic significance of what we do
• We learn that organization and shared meaning may be
one and the same
• We see how success hinges on the creation of shared
meaning
• Leaders and managers gain a new understanding of
their impacts and roles
• We see that organizations and their environments are
enacted domains
• Strategic management is understood as an enactment
process
• The metaphor offers a fresh perspective on
organizational change
Limitations of the cultural metaphor
• The metaphor can be used to support
ideological manipulation and control
• Culture is holistic and cannot readily be
managed by a simple checklist
• Important dimensions are invisible and
what is easily seen may be relatively
unimportant
• Culture usually has a deep political
dimension
Seagram Case
• Questions:
 Why has Seagram initiated a values initiative?
• How well has the implementation been done to date?
• What tools and techniques are more potent than the use of
explicit corporate values?
 If you were one of Seagram’s executives, how would you
respond to each of the five challenges at the end of the
case?
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Actions on recommendations
Punishments for values violators
Rewards for value champions
Values for MCA/Universal
Sustaining and consolidating the change?
Power
Organizations as political systems
• Power – the ability to get what you want, when
you want
• Politics – the process of acquiring and using
power
• As no-one can get everything they want when
they want it, politics inevitably involves
coalitions, compromises, and conflict
management.
• According to Morgan, many organizations have
strong autocratic tendencies – does that mean
CEOs always get what they want?
Sources of power
• Toffler
 Power rests on delivering or withholding:
• Violence (feudalism) – coercive power
• Wealth (capitalism) – reward power
• Knowledge (third wave) – expert power
• Lukes
 Three faces of power
• Ability to make decisions (authority)
• Agenda-setting: ability to decide who/what/when/how
decisions will be made (influence)
• Ability to shape perceptions so that policies that favor the
powerful are seen as natural, normal, or rational and
therefore not questioned (ideology or enactment)
• Resource Dependency
Resource Dependency
 Control of:
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scarce resources,
decision processes,
knowledge/information,
boundaries,
technology, uncertainty,
informal networks,
counter-organizations
 Units that deal with the critical problems of the
organization will typically have power
• Dependency is the opposite of power
Exercise
• How political is your organization?
 Which department has the most power?
• Does this follow the predictions of resource
dependency theory?
 How much conflict is there between
departments?
 Does politicking hurt performance or limit the
strategic choice?
Power and ethics
• Are these tactics from the 48 laws of power ethical?
Necessary?
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#2 Never put too much trust in friends
#3 Conceal your intentions
#7 Get others to do the work but take the credit
#10 Avoid the unhappy and unlucky
#11 Learn to keep people dependent on you
#14 Pose as a friend, work as a spy
#15 Crush your enemy totally
#32 Play to people’s fantasies
#38 Think as you like but behave like others
#45 Preach the need for change but never reform too much
Great intimidators
• Angle
 Social intelligence vs political intelligence
 Empathy/soft power vs. intimidation/exploitation
 Leverage strengths vs. leverage fear/anxiety
• Behaviors
 Get up close and personal, be angry, keep them guessing
 Know it all, be aloof
• Counters
 Do your homework, work harder
 Laugh at their antics, earn their respect, call their bluff
 Keep your perspective, stick around
Implications for
Strategy Execution
• Dysfunctional organizations
 Often have misaligned power structures
 Can be very resistant to new initiatives
 Hrebiniak argues that boards will often
discipline CEOs that don’t make tough
decisions (really?)
 Successful execution may require co-opting
or destroying the dominant elite
• Ability to use hard power as well as soft power
 Strategic choices create new fiefdoms
Donna Dubinsky Case
• Questions:
 Why was Dubinsky initially so successful at Apple?
 How and why did things unravel for Dubinsky?
• What changed in the business and the Apple context?
 Why did she respond the way she did to the JIT
proposal? (Put yourself in her situation -both
intellectually and emotionally)
• Do you think she and others at Apple could have done things
differently?
• How should Campbell respond to Dubinsky?
• What are the key lessons from this case for
strategy execution?
Strengths of the political metaphor
• We see how all organizational activity is interestbased
• Conflict management becomes a key activity
• The myth of organizational rationality is
debunked – rational for whom?
• Organizational integration becomes problematic
• Politics is a natural feature of organization
• It raises fundamental questions about power and
control in society
Limitations of the political metaphor
• Politics can breed more politics
 Is there an optimal level of politics?
 Is zero the target?
• It underplays gross inequalities in power
and influence
 Can a marketer ever become CEO in an
engineering organization?
People advantage
• Pfeffer’s practices
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Employment security
Selective recruitment
High wages
Incentive pay
Employee ownership
Information sharing
Participation &
empowerment
 Self-managed teams
• Ctd.
 Training
 Rotation and crosstraining
 Symbolic egalitarianism
 Wage compression
 Promotion from within
 Long view
 Measurement
 Overarching philosophy
REALISTIC OR NOT?