Systems
Theory in the 1950’s was a serious attempt to unify all of
science into a coherent, single, grand
theory. Today we might laugh at such an attempt, but our of
this theorizing developed some useful concepts that remain
apart of our current understanding of business. Systems
theory generalizes that all events and objects exist within
a larger universe of events that shape and influence the
particular event of interest. This is similar to a solar
system concept, in which Hampton University is located
within a larger system called the United States, which is
located within a larger system called the globe, which in
located within our galaxy, and so forth. Using this model or
analogy a business is viewed as an element of a larger set
of interacting systems, which we identify as:
- Global
Economy
- National
Economy
- Demographics
- Cultural
System
- Legal System
- Industry
These environmental systems are
largely outside the control of the business – they cannot
be “managed”. They impose critical conditions for
business management: the state of the economy, change in
buyer preferences, new statutory requirements, shifts of
business and people, and basic changes in the way in which
business is conducted.
Business must either adapt to these changes or
otherwise find an insulation from, or accommodation to,
large system changes.
Large system changes are a major
source of business change. Current obvious system changes
are:
1.
Migration of traditional businesses to the Internet
– technology changed (first reading)
2.
Globalization of businesses – communications and
transportation changed with political changes
3.
“Diversification”, “gender issues”, and
accommodations for the disabled – values changed
4.
“Sun Belt”, “New South”, “North-East Rust
Belt” – demography changed
There can also be internal sources
of business change. These usually show up as process
inefficiencies or problems, but can also arise from
organizational conflicts or leadership changes.
Although there are on-going large
system changes and occasional organizational events that are
stimuli for change, businesses change when management
perceives the need to change and takes action to change.
Because of the hierarchical nature of business
organizations, change necessarily is dependent upon top
management for implementation and eventual success, but it
also takes the involvement of workers.
The
"E-Commerce revolution" is an example of business
accommodating to environmental change - new technology.
Green's "Throw Out Your Old Busioness Model"
illustrates the late 1990's movement into e-commerce through
providing information, advertising, and
"services", rather than
"brick-and-morter" businesses' reliance on product
sales.
Throw
Out Your Old Business Model,
Green
The
author describes how e-commerce companies are re-defining
their business by examining their competencies and expertise
for revenue generation, to include complementary services as
revenue producers. E-commerce firms depend upon referrals
and ads to complement revenues from the obvious business.
Let's look
at the current status of the firms cited by Green:
| springstreet.com |
Now,
Homestore.com has been successful in
listing rental properties and
diversified into "home"
products. |
| Organic Online |
Now,
organic.com is struggling with lower
profits by cutting costs and expanding
into "business solutions". |
| CNET |
Expanding into
information for IT and has maintained
resonable financial status. |
| biztone.com |
This Malaysian
firm is defunct. |
| quicken.com |
Has ventured
into finaicial investment online. |
| Aon
Corporation |
A Forune 500
company with continued growth in
insurance and risk information services. |
| impresse.com |
Ran in to debt
problems and recently acquired. |
| privaseek.com |
Develops
software for ecommerce customer
relations. Financial data not available. |
| chrome.com |
Provides
internet data and software for selling
autos on-line to dealers. Privately held
company. |
In
"The Changing Corporate Climate in Japan" Shuichi
exposes a system - culture - in change. While economic
progress in the post-WWII period led to creation of the keiretsu
system in which the nation's banks aligned with major
companies to form cartels, this system produced large
surpluses that went unsold, guaranteed employmment of
workers, and large debts that could not be repaid. These new
economic realities created demands for consolidations
(mergers) of banks and the demise of the keiretsu. Japanese
automobile firms entered into foreign joint venturers and
cut costs and labor force. Among the social changes cited
are:
-
fewer
college grads can rely on employment, much less
life-long employment
-
more
Japanese youth becoming entrepreneurs, including
e-commerce ventures
-
reliance
on securities (stocks) for capital, rather than
big bank financing
-
increased
reliance on foreign labor, as the Japanese
population ages
-
pressures
for changes in corporate taxation and government
regulation
The
article's interview with the president of Toshiba
illuminates the problems with Japan achieveing change:
guaranteed employment, education, nationalism, managerial
accountability, and slow government change.
Williams'
"2001: An Entrpreneurial Odyssey" examines trends
to explan the future state of the business system. Although
the inserted chart relates this change to new technology,
low inflation, and 2-family income, etc., the author cites
the Boomer generation of values as a key driver, creating
new "kinder" business values. The avialability of
choices to career, the value for independence and economic
well-being to make choice contribute to this change.
Mechanism of Organizational
Change
Practitioners rarely have the opportunity
to redesign whole organizations or create new structures, we
are more often interested in making the organization or
organizational unit that we have inherited work more
effectively or reorder organizational resources (within the
larger organizational models available) to implement
strategies. These changes are most often the result of
larger environmental system changes in which the firm is
situated - requiring a re-direction and reassignment of
resources. Changing organizations in this context is
organizational development or OD. OD is the purposeful and
systematic application of what we know about organizations
and people to facilitate management. The theory in this area
of management is less well developed into accepted systems
of thought and language, but for us (as practitioners) OD is
of most interest.
Because OD can be eclectic in content,
there are a variety of academic and commercial approaches
available that focus on diverse management issues including
leadership development, team building, sensitivity training
(diversity issues), specialty training, career development,
and conflict management. Most approaches build on the early
work of Kurt Lewin, called force field theory. Lewin
viewed the organization as a system of interrelated parts
and competing forces or opposing transient groups. System
change engages forces resistant to and in favor of change.
This can be illustrated in as forces attempting to realize
change working against forces attempting to resist change:
The change
process in an organization has three distinct stages:
- Unfreezing, at this stage a
sense that change is needed must be developed
- Changing,
organizational change is implemented
- Re-freezing,
the new order is institutionalized, presenting the
new equilibrium
Lewin’s framework is helpful in
that it allows us to think about a staged approach to
changing things. There is a stable starting point that
requires change, change is executed, and a new stable order
emerges. The limitation of Lewin’s work is that
organizations may always be undergoing some change and
period of stability are hard to identify.
Certainly an organization in serious
trouble is already “unfrozen”. A few organizations may
even to be out of equilibrium for an extended period of
time-- for example, a business in search of a new strategy.
Lewin recognized that even when we attempt a change, the
outcome may not coincide with our intent. Organizational
change depends upon the ability for organizational members
to accept and make a change that is beneficial to the
organization, the individual and the collective membership.
Mechanism for Managing Change:
1. Leadership. In business organizational
change requires commitment from the top. A change may not
begin at the top, but it will have little chance for
successful institutionalization without top level support.
This is because executive management controls resources to
implement objectives and strategies and is accountable to
the owners for this. As organizations are hierarchical,
redirection of a significant nature will also typically
start at the top, usually through perceived need to realign
the organization with changes in the environment or for
execution of a strategy. Moreover, the role of the top
manager is to perceive from the environment those changes
that should alter the course of the business.
2. Teams. To communicate change directions
and to execute change through the organization, the team
approach is effective. Teams focus individual member actions
into collective actions through the dynamics of cooperation
and, even, conformity to norms. An effective way to
organize teams throughout the organization is to employ a
"linking-pin" approach, in which the leader of
each subordinate team is a member of a superior team. This
enhances communications flow up and down the organization
that might not prevail when change is attempted
differentially across the organization. The
cohesiveness (or conforming) of members in teams helps
provides a cohesiveness to the effort which through the
"linking pin" organization becomes transmitted
across the organization.
3. Organizational Culture. Organizations
have their own culture. Organizational culture is
maintained in a fashion similar to the larger culture. At
Hampton University we have a culture that is reinforced by
myths, stories, and symbols: the “Hampton way“ is
loosely linked to “freedom tree”, the founding story
rooted in Reconstruction, “Don’t walk on the grass in
front of Ogden Hall until you graduate!”, the story of
Booker T. Washington’s education and his statute, the art
of Biggers and Tanner, “Wigwam”, and “head, heart and
hands”. Within the institutional culture at Hampton we can
identify sub-culture groups of students, even faculty and
administration – transient cliques that bring opposing
values and interpretations to events. As people in
organizations share symbols, stories, and beliefs, these
cultural artifacts can be interpreted to support the
cause and objective of change. This is illustrated when
leaders reference a story of the company's founding or the
founder's mission as a basis for the new direction of the
company.
4. Objectives and Evaluation Criteria.
There is possibly an over-emphasis on the details of
planning for a change. Benchmarks and time-tables can be
helpful, but it is also easy to confuse these with the
objective of achieving change. An overall direction that is
effectively communicated to be shared by members is key.
When change involves budget, operations, or manpower
objectives, as they often do, measures will assist in
assessing if change is taking hold and help evaluate if the
change is moving the organization in the intended direction.
Measures can also help identify where problems persist to
give focus to these areas. Where timetable and benchmarks
become problematic is in correctly assessing "how
fast" change can be implemented.
