Excerpt
Table of Contents
1. Summary
2. Introduction
2.1. Backround
2.2. Research question
3. Methods
4. Theory
4.1. Overview - Organizational Development
4.2. The Congruence Model
4.3. The Litwin Burke Model
4.4. Rafferty and Restebog’s approach on change
4.5. Research frontier – Organizational Development
4.6. Innovative Organization
4.6.1. Overview – Innovative Organizations
4.6.2. Innovative Organizations – creation and processes of innovation
4.7. Summary
5. Description
5.1. Decsription of Ericsson
5.2. Description of the change situation
6. Interpretation
6.1. The situation prior to the merger
6.1.1. The Congruence Model – Diagnosis of the situation at Ericsson
6.2. The situation during the merger
6.2.1. The Litwin and Burke Model – the change process at Ericsson
6.2.2. Rafferty and Restebog – the impact of change on the staff at Ericsson
6.4 Interpretation – Conclusion
7. Re-Interpretation
7.1. Re-Interpretation – Innovative Organizations
7.2. Re-Interpretation – Jackson and Carter
7.2.1. Overview Jackson and Carter
7.2.2. Semiotics
7.2.3. Knowledge
7.2.4. Power
8. Conclusion
9. References
9.1. Books
9.2. Articles
9.3. Internet sources
10. List of figures
11. Appendix
11.1. Explanation of terms used
11.2. Interview
11.2.1. Interview questions
11.2.2. Interview with K.A. A., 17.11.2010
1. Summary
Change takes place everywhere in today’s society. Different authors researched theories on Organizational Development to help to find solutions how to deal with the complexity of change successfully.
Ericsson, a company that experienced trouble trying to sell their products in a changing market environment, serves as example. The Congruence model, a diagnostic tool, perceives the initial situation at Ericsson. Being pushed into a market that previously served premium customers, Ericsson was unable to adapt to challenges and requirements, which are typical for mass markets. An option to react to change is the Litwin and Burke model, which approaches change from a climatic respectively transactional and cultural respectively transformational perspective. The merger from Ericsson to SonyEricsson implied a structural change rather than a cultural change. Two cultures clashed. Sony, a customer driven company and Ericsson, a technology oriented company tried to create a shared corporate culture at SonyEricsson. To explain the initial disappointment of the merger, the employee’s treatment and the impact of the change on organizational members were analysed by using the approaches of Rafferty and Restebog. Other methods to the topic of Organizational Development reflect on change processes from a different point of view. One of these methods is the angle of Innovative Organizations. Companies need to create an innovative climate and need the knowledge how to undergo innovation processes, to survive in fast moving markets. Ericsson had problems to launch enough innovative products. They were not capable to offer “the whole package”, for instance marketing, distribution and the adaptation to varying consumer demands. A further angle to reflect on the topic of Organizational Development is assessed by Jackson and Carter, who critically rethink organizational processes. Taking Jackson and Carter into consideration and thinking out of the box, even more problems at Ericsson appear on the surface. The management was unable to use its power properly and share its knowledge with employees. The brand name of Ericsson appeared to be weakened within the new company SonyErcisson consequently the staff became demotivated.
Theory offers a wide range of solutions how to implement change successfully. However, these theories are not always applicable in the praxis, as the example of Ericsson shows. Adjusting theory to praxis would be necessary to update theoretical frames for future purposes.
2. Introduction
2.1. Backround
Companies today are exposed to much more rapid changes than they were decades ago. This development provides the reason to analyse approaches that help to overcome inflexible, conservatively-managed companies and lead change initiatives successfully. (Kotter, 1996).
In the late 1990’s Ericsson faced major problems, selling their products to customers. Ericsson experienced a crash from being the market leader to rock bottom. To save Ericsson’s reputation, they needed to find a solution to their problem to survive in the market. Therefore Ericsson’s approach was to look for a company, which would provide the expertise, they lacked. They found an equal partner in Sony and built a Joint Venture with them. However, success is not automatically guaranteed when joining forces with another company. Success is a question of many aspects. Thus the different perspectives from several theoretical models on success give a new understanding of the change situation.
2.2. Research question
How is change successfully implemented regarding the merger between Sony and Ericsson from an Ericsson’s management perspective?
3. Methods
In particular, this paper analyses Organizational Development at Ericsson in regard to the Litwin and Burke Model, the Congruence Model, Innovative Organizations and describes the approach by Jackson and Carter before a conclusion of the approaches is drawn. Furthermore every theory described is applied on Ericsson.
The first part of this paper covers a summary of the whole paper to give a broader overview to the reader. After that the problem itself will be introduced. Implementing a change between two merging companies that face market turbulences. The next part will describe Organizational Development according to French and Bell (2010). Limitations of Organizational Development are explained in regards to the research frontier and the up-to-dateness of the field of studies. In the theoretical frame emphasize is put on the Litwin and Burke Model, the Congruence Model and Rafferty/Restbog’s view on the impact of two merging companies. The models applied were chosen in regards of diagnosing the change, the change process itself and the impact on employees and management. Out of three topics, Creative Organizations, Innovative Organizations and Entrepreneurial Organizations, the topic of Innovative Organizations was highlighted as it matched a technical company like Ericsson and analyses the situation from a new perspective.
Next the company selected and its history is described to get backround information and a better understanding of Ericsson. The company Ericsson was chosen because of the ability to relate to it and their widespread products. The major change situation looked at is the Joint Venture of SonyEricsson and the adaptation of the management to the newfound situation. An interview with K.A. A. (due to copyright restrictions, the name has been abbreviated), who has been a top manager at Ericsson until 2003, has been taken in the paper. The interview was held via Skype, since the interviewee lives abroad. It took 58 minutes and was held on the 17th of November 2010. The interview questions were sent out to him five days prior to the interview, to give K.A. A. the possibility to research data and prepare thoroughly. Participants in the interview were P. Trimborn, L. Sällström, A. L. Bischoff and K.A. A.. The timeframe being discussed in this paper is from 1998 to 2003. Furthermore has the focus been laid on Ericsson instead of Sony when looking at SonyEricsson’s merger due to the access of information.
Interpreting Ericsson’s situation the following aspects were discussed: The theories analysed were applied on Ericsson and critically assessed as well as judged whether the change was successful or not. In regards to Innovative Organizations, the success of the merger was once again questioned. These findings were further considered in a re-interpretation according to Jackson and Carter where the topics of Semiotics, Knowledge and Power were stressed.
At the end of this paper a conclusion about the Ericsson’s managements reaction towards the change is drawn as well as suggestions about how the situation could have been handled differently is given.
4. Theory
The following part will cover an overview over Organizational Development in regards to French and Bell. It will continue with explaining specific models suggested by French and Bell. The Congruence Model and the Litwin and Burke Model, as these are later on used to depict the situation at Ericsson. The theoretical part continues with a further approach by Rafferty and Restebog. The limitations of these first parts are considered in the research frontier. After that the problem of Organizational Development is tackled from a different angle, Innovative Organizations. Finally the second chapter concludes with a summary, which highlights the most important parts of each of the sections mentioned above.
4.1. Overview - Organizational Development
Organizational Development (OD) tries to give guidelines to increase function and effectiveness within the organization such as organizational structures and individual’s behaviour and their mind-set. “OD is a response to change a complex educational strategy intended to change the beliefs, attitudes, values and structure of organizations, so that they can better adopt to new technologies, markets and challenges” (Bennis, 1969).
Change is supposed to be sustainable and takes years to be fully implemented. It’s an ongoing process that never ends. To maintain the aim of the change set previously, top managers need to encourage change. They need to take a leading and supporting position and be committed to the transformation so that members of the organization trust their leaders. According to French and Bell the importance of a clear vision is crucial. By introducing a clear vision it becomes more apparent for the people. By making members of the organization working together, words becomes action. To reach their full potential employees need to be empowered. Organizations can help to develop the ability of its employees by involving them in decision process. P.M. Senge (2006) claims organizations should offer the possibility to engage in learning processes by creating a hunger for knowledge. Education is a necessity, to continuously keep up with the pace of time.
Goal oriented thinking is a vital aspect of problem solving. When problems occur, organization members are supposed to stand united and be able to find solutions for the organizations path. Culture is the backbone of an organization. People make culture by living up to their values, beliefs, expectations, assumptions and norms. Every level of the organization reflects upon the directive. Culture is a natural way of belonging through out history and by people living it, culture changes according to the people. (French, Bell; 1999)
The last piece in the puzzle of OD is work teams. Work teams enhance efficiency and cultural feelings of belonging within the organization. Operating in teams makes people think and work without restraints. (French, Bell; 1999)
According to French and Bell the two most important goals within the OD program are not only to change people and structures, but also to enable organizational members to help themselves to improve the organizations success. (French, Bell; 1999)
Change is creating something new out of something old. The change within organizations can be driven by external or internal factors. External factors consist of economic, competitive, government restraints, social change and technological change (Bibeault, 1998). Internal factors are the lack of managerial skills, bureaucratic management, weak finances and nonparticipative board of directors (Bibeault, 1998). Unplanned change is forced upon the organization from its environment, thus an external impact and usually visible. Whereas planned change is the need to reorganize within the organization, thus an internal influence and not obvious to everyone. (French, Bell; 1999)
Changes appear constantly, usually when it’s not the best of times. OD finds ways to approach the complexity of change and offers guidelines of solutions (French, Bell; 1999).
4.2. The Congruence Model
The model is used to offer a guideline for managers, comprehending how to manage organizational fit. Furthermore it is designed to find out how the organization has to transform to compete with rivals in a constantly changing environment. (Nadler, 1998)
Every organization operates with the following given factors: The environment, resources and history. All in all they build the input component of organizational structure.
The environment is an external effect, which pushes organizations to adapt. Examples consist for instance of customers, competitors and technological revolutions, as e.g. the Internet. Due to the environment’s impact, change usually occurs unplanned. Resources refer to the organizations possessions. Resources can be defined in a wide range of ways. For instance production plants account as tangible assets. Intangible assets as creativity and employees, account for resources, too. The company’s past describes the organizations history.
Taken from the input components, a business strategy evolves. Constraints and opportunities have to be mapped out. The decision process includes markets, offerings, the competitive basis and performance objectives. Input factors and strategy being processed by the system generate output. This output is measured as performance, which can be determined from different angles: The total system, units within the system and individuals.
Looking closer at the model, more aspects of the process are covered by Nadler (1998). Employees work influences the procession by their knowledge and skills, reward systems, contribution to work and constraints. As work is executed by employees, people and their fulfilment of work requirements have to be considered, too. (Nadler, 1998)
In a broader sense work execution is influenced by formal organization, which includes structures and procedures and informal organization, which consists of culture, unspoken rules and “how things really work” (French, Bell; 1999).
Abbildung in dieser Leseprobe nicht enthalten
Exhibit1: The Congruence Model, Nadler, M., 2009
French and Bell claim the Congruence Model to be an excellent diagnostic tool for companies, which are struggling to perform (French, Bell; 1999).
4.3. The Litwin Burke Model
Litwin and Burke distinguish between cultural and climate change in an organization. While Litwin and Burke define climate as shared feeling and perceptions, they refer to culture as collection of values and unspoken rules (Litwin, Burke; 1992). When it comes to a change of the climate in an organization it is easier to accomplish than cultural change. This is due to the fact that values are firmly anchored within human beings.
The change concerning climate is called transactional. By changing structure, management practices and techniques, motivation among employees is increased thus transactional, respectively first order change. (Litwin, Burke; 1992)
Change concerning culture is called transformational. Causing transformational respectively second order change, the organizations vision and strategy need to be redefined. By redesigning organizational culture, the individual’s performance is enlarged. (Litwin, Burke; 1992)
According to French and Bell (1999), the Litwin Burke Model is considered to be significant when it comes to planning change. First of all the situation is determined, secondly by knowing whether the change is either transactional or transformational, the interventionist is able to take the action which suits the situation best. Finally action is taken by investigating (French, Bell; 1999).
4.4. Rafferty and Restebog’s approach on change
Rafferty and Restubog (2010) claim that the successes of a merger depends very much on two major points, namely the individuals change history and communication processes.
Communication can be divided into formal- and informal change communication. Formal information is top down communication, intended to create agreement. Usually formal communication is official, prearranged, depended on facts, hence newsletters, emails and information meetings. Informal communication is not standardized, unofficial and occurs among staff and management stimulated by the spur of the moment. (Rafferty, Restubog, 2010)
According to Rafferty and Restubog (2010), time management and correctness of information is vital to the employee’s compliance with change. Staff is less worried and eagerly participates. The higher the quality of information is, the higher will the individuals support for the change be. (Rafferty, Restubog, 2010)
Commitment is furthermore fuelled by the individuals change history. Employees having experienced positive change previously, were more willing to put an effort in the change.
4.5. Research frontier – Organizational Development
Organizational Development is a rather new field of studies. It first appeared in the late fifties and early sixties (French, Bell; 1999). Only in recent decades have researches started to investigate on the topic of evolutionary change more specifically (Schwarz, 2009). Unplanned change has occurred since businesses were established. This is something that the companies cannot influence and had to deal with by their own means. Being forced to adapt to change, organizations started to develop programs of planned change. This gave the organizations knowledge about change as well as structures how to handle unknown situations. Even though unplanned change still appears in business, it has become easier to undergo the change. Planned change programs gave organizations an idea how to approach change in general.
While the traditional theories of Organizational Development cover methods and technologies how to cope with change, modern theoretical frames reflect on the topic of Organizational Development from a human perspective. They try to find out how people react to change and why that is. Modern literature does not offer one right way to implement change successfully, but many different tactics. (Jackson, Carter; 2007)
4.6. Innovative Organization
4.6.1. Overview – Innovative Organizations
Innovative organizations are to be desired. Organizations that do not life up to these requirements need to change to become an innovative organization (Prather, 2000). It is important to be innovative to survive in a fast moving business. Innovations can be perceived from different points of views. Either the innovation process itself or how to create an innovative atmosphere can be found in research.
4.6.2. Innovative Organizations – creation and processes of innovation
Innovation is creating something new out of something given or creating something completely new. Innovation in organizations refers usually to technical processes. To be the major innovator in the market, organizations need to have the knowledge how to be innovative and how to carry these out. (Knoke, 2001)
According to Van de Ven (1999), there exists no specific innovation process, still similar patterns can be determined when it comes to the process of innovation. Using empirical surveys, Van de Ven discovered three innovation phases: The Initiation Phase, The Developmental Phase, The Implementation Phase. The Initiation Phase is described as a process that takes time to develop and is in the majority of cases triggered by unforeseen events. During the developmental process, The Developmental Phase, the original idea grows into several inventions. Along with new innovations, mistakes arise. This is part of the natural innovation process. Budget constrains lead to a fear of mistakes. Van de Ven (1999) continues with innovators being humans, that are affected by emotions e.g. euphoria, frustration and closure. Due to innovators being affected by their emotions, it is crucial for managers to intervene to keep the process up and running. By expanding the innovation, organizations start to reach out to one another to fuel the innovation process and to add infrastructure. The Implementation Phase explains when an innovation is completed. Termination is either reached by the innovation fulfilling demands or by resources running out. The top management or investors determine whether they are a success or a failure. (Van de Ven, 1999)
Since innovation evolves from new customer demands and keeping up with competitors, organizations are constantly forced to create. Making the right decision can be a question of survival (Knoke, 2001).
C. W. Prather (2000) refers to innovation in creating and encouraging an innovative climate. He uses three different areas that distinguish innovative organizations, Education, Application and Environment, whereas the emphasis lies on the latter. Offering education to organizational members helps to increase quality and quantity of the individual’s ideas. Application clarifies the importance of teamwork in regard to shared problem solving. “[…] the environment arena has the greatest impact of the three on the innovative output of any organization.” (Prather, 2000, p.17). The climate for innovation is influenced by creativeness and the encouragement of change (Prather, 2000). In regard to Isaksen and Ekvall (2010), shaping the climate can be realized by using the following nine steps.
[1] Challenge/Involvement. The more people are involved in daily routines and long-term results, the higher will the level of commitment be. [2] Freedom. The ability of the individuals to decide how to fulfil their work tasks. [3] Trust/Openness. Empowering employees helps to make them share ideas and opinions with honesty. [4] Idea-Time. Description of how much time should be allocated to the staff to explore new ideas. [5] Playfulness/Humor. A relaxed atmosphere displays the high level of Playfulness/Humor. [6] Whereas conflicts among each other and pressure contradict the work atmosphere. [7] Idea-Support. Reaction towards new ideas from colleagues and the co-workers appreciation. [8] Debate. Employee’s rate of exchanging opinions, experiences and knowledge. [9] Risk-Taking. The eagerness to try something new, even though the attempt is reasonable but the outcome is in doubt. (Isaksen, Ekvall, 2010). From Prather’s point of view a further dimension should be added to the original model. [10] Value for diversity of thinking style. Tolerance and open minded atmosphere towards colleagues and different ways of thinking. To support the innovation process shared values should be implemented in an effective way. (Prather, 2000).
Developing innovations doesn’t necessarily mean to succeed. Competitors constantly challenging one another, leads to an “innovative-viscous-circle”. Always wanting to be on top of the game, and competitors following, makes innovations spiralling out of control. (Knoke, 2001)
4.7. Summary
Even though change is a current topic, organizational development is not as deeply researched and developed, as one would expect.
Several authors claim that change needs a certain amount of time to settle in. Successfully implemented change can be reached through different approaches. Change has many faces. Still, all changes have the process of how to manage the situation in common. Change consists of three main steps: Diagnosis, analysis and implementation.
Nadler (1998) describes an Input-through-Output model, the Congruence model, where he explains the whole process of change, starting with the input, the process itself from different angles and finally the output. This model is considered to be an excellent diagnostic tool. Litwin and Burke (1992) concentrate on the aspects of culture and climate and their impacts on the success of change. Change cannot only appear structurally, but emotionally as well. Rafferty and Restubog request to keep the employees perspective in mind. Prather (2002) claims that an innovative organization is needed to survive change. Creating an innovative climate and knowing the process of innovation is therefore existential.
5. Description
The Descriptions gives a broad overview of the company Ericsson. When and where it started and why it became the company customers know today. After that the change situation, which will be analysized in this paper, will be explained.
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