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EE: What does "organizational renewal" mean as used in the
program?
O'Reilly: Here's an example. If you asked someone thirty years ago
what business Hewlett Packard is in, they would likely have said testing and
measurement. Fifteen years ago, the reply would probably have been
mini-computers. Today, their response would be printers and personal computers.
Ask what business they think the company will be in ten years from now, and
you're likely to hear 'e-commerce.' So the challenge is how to design agile
organizations able to leap from strength to strength to strength.
Tushman: A successful company could be said to have a kind of
franchise, that is, a niche in the marketplace within which it has demonstrated
its ability to overcome challenges and operate profitably. But, far too often,
that success breeds inertia. As customers and markets change, organizations must
continually sow fresh seeds if they are to remain a viable force in tomorrow's
markets. In this program, we demonstrate how firms can cannibalize their
existing franchises to build those required for tomorrow's success. The goal for
managers, then, is to sustain current success while simultaneously building a
new organization. To do this, organizations must learn to be ambidextrous. When
firms lack such ability, they will rise to some level of success, only to fail
and, perhaps, later recreate themselves in a new image.
EE: How is evolution in the global economy affecting managerial roles
and responsibilities?
O'Reilly: Sustainable competitive advantage is diminishing because,
increasingly, firms can locate plants anywhere, and call on human, financial,
and other resources without regard for locale.
Tushman: Not only has the pace of change quickened, but as
organizations become more global, their ability to exert leverage on suppliers
is growing. Consider one firm we've worked with, an international consortium of
independent gas companies. Recently, one of their valued global customers told
them that dealing separately with their member companies in seventeen countries
had become a burden, so they were calling for a single integrated solution. If
organizations are to survive long-term, managers must learn how to create
organizational architectures that can be, at once, centralized and
decentralized, small and large, local and global-in other words, ambidextrous
organizations.
EE: How is organizational design adapting to such evolutionary change?
Tushman: First, let's define what we call 'organizational
architecture.' From the perspective of managing change, it encompasses not only
organizational structure, but perhaps more importantly, core competencies,
processes, and organizational culture. It is the firm's hardware and software
that must be integrated to swiftly execute business strategy. In successful
firms, we find all of these elements changing simultaneously. Naturally, it
becomes a very complex management task.
EE: What do you see as being the greatest barriers to organizational
change?
O'Reilly: I think that unquestionably it's the tendency for many
companies to develop a strong comfort level based on current success. They often
become complacent, almost arrogant, about their success. They focus solely on
doing what they now do better, rather than building the foundations for what
they'll need to be doing when the world around them has substantially changed.
Tushman: In Leading Change and Organizational Renewal, we begin by
helping managers to recognize inertia within their own organizations, and to
understand its root causes. But, we don't stop there. We also give them a set of
pragmatic tools and skills for managing change and creating the sort of
ambidextrous organizations we described earlier.
EE: How is the program structured to facilitate learning and the
acquisition of new skills?
O'Reilly: The program is designed to both engage attendees and to
prepare them to implement that learning when they return to their organizations.
Tushman: We employ a combination of approaches throughout the program
to maximize learning effectiveness. Each day is built around a carefully planned
series of class discussions, lectures, and case analyses. A selection of written
and video cases provides participants an opportunity to confront real-life
situations in the safety of a classroom environment. Evening sessions are
devoted to integrating the day's learning and applying it to participants'
respective organizational situations. We also organize attendees into work
groups for both case analyses and the evening integration sessions. This offers
a different opportunity for interactive learning.
EE: Who is likely to benefit most from the program, and should
companies enroll more than one manager?
O'Reilly: Leading Change and Organizational Renewal has been developed
primarily for those in general management, from the divisional level manager to
the corporate officer who might manage a portfolio of businesses. However, it is
also appropriate for the functional manager who clearly is on a general
management track.
Tushman: Companies do gain by having multiple enrollments in a given
session. This expedites learning by enabling individuals from a company to work
together in problem solving and in applying newfound skills to the unique
challenges facing their respective organizations. Consequently, firms may want
to enroll several individuals, ideally from divergent backgrounds. The
interaction that then develops is enriched by a broad range of perspectives. Let
me also add that smaller corporations stand to benefit as much or more than
their larger counterparts who likely have had some experience in managing change
and organizational renewal.
As Professors O'Reilly and Tushman point out, leading an organization in an
ongoing process of change and revitalization is necessarily complex. Pitfalls
lie waiting where least expected. To avoid the cyclical trap of
success-failure-rebirth, firms need to develop competency in simultaneously
sustaining a dual management focus; one that concentrates on meeting the
challenges of today's marketplace, another with its eye firmly set on a very
different world that lies beyond the bend. Leading Change and Organizational
Renewal will help senior managers and executives to better comprehend the forces
of change, and demonstrate how to better manage their own organizations for
long-term viability and success.
Interview Courtesy of Harvard Business School
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