Development of a Transformation Model for Change and
Integration Processes
Christian Fuchs, Ph.D., MBA, Department of Management, Mendel
University in Brno, [email protected]
Abstract
In this article the development of a model for change and integration processes is described.
By literature survey the strategic background for such processes is investigated and the
fundamentals of behaviour in the course of such processes are identified. The developed
transformation model is presented and described with its integrated character as the main
result of the study. After reflections about its relevance for companies and those involved in
the subject processes, the paper is completed with conclusions containing references for
recommended courses of action.
Key Words
Strategy change, change, integration, fundamentals of behaviour, resistance, leadership,
transformation model
Introduction
Enterprises are always embedded in a certain environment. This environment has in the last
decades become less clear, less predictable and finally less stable. People are exposed to new
situations with which they have no experiences to deal with.
Basically the globalisation offers a wide range of opportunities for short and long-term
growth in business. On the other hand one cannot ignore the tremendous changes coming
along with this new situation. One can realize quickly that big opportunities stand beside
considerable risks involved. To be able to cope with such scenario, companies have to be
prepared to adjust. Companies feel challenged and threatened by the above environment,
which is dynamic and at the same time complex.
The last quarter of a century was also characterized by an increasing number of mergers
and acquisitions. The reason for that can also be seen in the rapid change of the economic
environment on an international to global level. However, a big majority of the mergers and
acquisitions failed. Therefore, aspects of change management and integration deserve to be
investigated thoroughly.
Objectives and methodology
“70% of all change initiatives fail”1. As a consequence of this literature shows an increasing
amount of publications about change management. But many of them have only the character
of guide books despite the fact that the influences and the interrelations between a number of
factors make the subject very complex. Against this background one goal of this paper is to
identify the behavioural and organisational determinants for change and integration processes
related to the role of the individual as the one who is directly concerned. Another goal is to
investigate the relationship between strategy and change processes.
As a result of these two approaches, the main objective of this study is the creation of a
model for change and integration processes which shall be used to make managers understand
what the reasons for such processes may be, what the determinants regarding management
and behaviour are in situations of change and integration.
The literature covering the important issues of the subject in context needs to be
surveyed. This survey delivers the theoretical frame of reference of the study and is also the
foundation of the model to be created.
“A model is a representation of real objects or situations. Modelling provides a way of
expressing our understanding of such objects and situations through the use of simplified
constructions […]”.2 The model will display the problem in a rat her imaginative and
conceptual way. It allows to describe the transformational character of the situations and
processes involved.
Survey of literature
When one approaches the field of change and integration processes and how to manage them,
various questions will arise with regard to the focus of this paper.
The literature survey concentrates on three major areas of problems:
-
What are the triggers for change and integration processes?
-
What are the fundamentals of the organizational, psychological and socio-cultural impacts
of change and integration on the enterprises and the humans concerned inside the
enterprises?
-
1
2
What may leadership of managers mean to such processes?
HBR’s 10 MUST READS, On Change
Curwin/Slater, 2008, p. 15
Strategic approach
Enterprises are framed in a certain environment, they never act alone on their own behalf.
Since the environment changes frequently and shows inhomogeneous characteristics, it is
essential for an enterprise to review on a regular basis what its current position is and what its
position should be in the medium and long term.
One of the best known definitions of strategy is the one of Chandler, where strategy is
“[…] the determination of the long-run goals and objectives of an enterprise and the adopt ion
of courses of act ion and the allocation of resource necessary for carrying out these goals.”3
The introduction of the strategic management was driven by the changes in the
environment of the enterprises and the requirements for the enterprises thereof. Ansoff
discovered structural changes in firms by growth and complexity, and concluded the
importance of structure, behaviour and culture for firms.4 Ansoff structure, culture and
behaviour are now at the very fore, being the components of an ‘Intra-system-fit’ of the
subsystems.5 Already in 1962 Chandler postulated that a strategy change is often the actuator
of a reorganisation which lead him formulate the famous hypotheses ‘structure follows
strategy’.6
The ‘intra-system-fit’ model was taken up later in the seventies in the McKinsey’s ‘7-SModel’. This model demands the tuning of the seven subsystems involved. The subsystems
are characterized by rational – quantitative and emotional-qualitative ones. Basically this is
what one has available inside of an enterprise.
There were more frequent changes of the environment in the last decade compared with
earlier ones. The choice of the right strategy is considered to be a complex problem of
decision theory and analysis. The future conditions being more and more unpredictable and
the changes frequent, this may be a reason for frequent changes of strategy in some
enterprises.7
Classifying the aforesaid, change and integration processes are restructuring processes.
Changes in the environment of the enterprises necessitate reorganisation. Reorganisation is
normally be executed by projects with the objective of increasing the efficiency of the
organisation. Against the background of growing external complexity and dynamics it is
3
Chandler, 1973, p. 13
See Ansoff, 1965, pp. 48ff. and Bea/Haas, 2009, p. 17
5
See Bea/Haas, 2009, p. 17
6
See ibid., p. 16f.
7
See Bea/Haas, 2009, p. 202
4
advised, “[…] to put the main focus of attention on the design of a continuous capability of
change respectively transformation and willingness for that.”8
This is where ‚change management’ appears on the screen. It is about learning lessons
from change and integration projects and continuously upgrading the organisation with regard
to adaptability and flexibility.
The environment is what enterprises are exposed to, mainly offering opportunities and
threats. As said before, the future is unpredictable and this makes decision making for
managers so difficult. However, “[…] it is clearly important that entrepreneurs try to analyse
their environments as carefully as they can in order to anticipate and – if possible – influence
environmental change.”9
Any reorganisation in the sense of a change in the enterprise is caused by the wish to
make the organisation more effective and by doing so get back to better revenue or increase
the existing revenue, depending whether the change is a planned ahead or an unscheduled
change.10
Change and Integration
This section of the paper approaches the organizational, psychological and sociocultural
impacts of change and integration in the enterprises and those humans concerned inside.
The best strategy will not give the achieved result, if the change process is not
completely implemented or even fails totally. Experiences from praxis show that 60 to 80 %
of all change processes fail.11 A strategy change being an irrevocable process at least on shortterm and midterm view, such failure worsens the situation of the enterprise compared with
how it was before.
A change can only be managed if it is conceived in as many as possible aspects. 12 This
is not an easy task bearing in mind how dramatically the complexity increases because of the
fast and structural change.13
Change Management as a term appeared in the 1990s in connection with restructuring
measures in industrial enterprises. Today the term change management includes “[…] all
measurements […], which are necessary to initiate and implement new strategies, structures,
8
Ibid., p. 473
Johnson/Wittington/Scholes, 2011, p. 49
10
See Bea/Göbel, 2006, p. 498 f.
11
See von Rosenstiel, Comelli, 2003, p. 180 and Gattermeyer/Al-Ani 2001, p. 57
12
See Reiss/von Rosenstiel/Lanz, 1997, p. 3
13
See Doppler/Lauterburg, 2005, p. 36 f.
9
systems and behavioural patterns.“14 Consequently, change management relates to
reorganisation.
The term integration is used differently in different scientific fields. Whilst in business
administration the term vertical integration denominates the concentration of upstream and
downstream operations in production, in the context of this paper the sociological
denomination, which stands for the embedding of a minority into a larger social group, shall
apply. Integration is different from assimilation, which gives prominence to the adapt ion to
others.15 This will not always be in the interest of the entrepreneur who should aim for the
creation of a whole new thing which includes the values of those who are the newcomers as
well as the identity of the hitherto existing group.16
Fundamentals of Behaviour during Change and Integration
During the course of change always new grounds have to be broken and accustomed
behaviour needs to be left behind. As the environment changes the creative must adjust.
Ansoff stressed the importance of structure, behaviour and culture for the firm, Cyert and
March concentrated the attention on the behavioural patterns in firms in their book “A
behavioural Theory of the Firm”.17
Learning can be carried out in two ways.18 Successful behaviour is maintained and not
successful behaviour is abandoned. Siegmund Freud described thinking as acting on trial at
reduced risk.19 The fact that the human can adjust his behaviour fast and flexible to modified
conditions of the environment is owed to his ability to learn and think.
Motivation and volition are the building blocks of the individual willing. Both terms are
of high importance in the course of a change process, whereby motivation exists, when “[…]
one likes to do, what one should do, whereas volition is required whenever something which
does not correspond with the primary addiction shall be put in action […]”.20 For the change
process it is important to create conditions in the enterprise which motivate the effort s.
Herzberg, Hausner and Snyderman call these conditions motivators.21 Typical motivators are
job content, appreciation of performance and prospects for promotion. Individual
14
Gattermeyer/Al-Ani, 2001, p. 14
Kobi, 199 4, p. 71
16
See Speck, 1996, p. 400
17
See Cyert/March
18
See Reiss/von Rosenstiel/Lanz, 1997, p. 194 f.
19
See von Rosenstiel, 2003, p. 345
20
Reiss/von Rosenstiel/Lanz, 1997, p. 201
21
See von Rosenstiel/Molt/Rüttinger, 2005, p. 267
15
competences are critical when persons concerned come across unpredictable new situations
and requirements, which happen frequently during change processes.22 Individual willing
without personal competences will not provide the result desired. Another behaviour of the
human showing itself during change processes is that he often does not act in the way which
would correspond to his knowledge.23
1: Preconditions for the human behaviour (von Rosenstiel/Molt/Rüttinger, 2005, p. 259)
Resistance during Change and Integration Processes
“Passive resistance is the most potent weapon ever wielded by man […]”24. This statement
has proven in many political and social conflicts and the name of Mahatma Ghandi is just a
symbol of this behaviour. And it is not recent knowledge and can even be extended to
resistance to change. As in every other subarea of the organizational psychology the area of
conflict between the individual and the organisation has to be taken into account during a
change process.25 Any non-achievement of an individual in an organisation leads to
frustration.
Symptoms of resistance may include indifference, refusal, evasion, criticism,
resignation, work-to-rule, planting rumours, protest and even obstruction.26 Resistances
should always be taken seriously, because they show that something does not work out
22
See von Rosenstiel, 2003, p. 148
See von Rosenstiel, 1997, p. 201
24
Tucker, in Ansoff, 1965, p. 249
25
See von Rosenstiel, 2003, p. 131
26
See von Rosenstiel/Comelli, 2003, p. 188; see Doppler/Lauterburg, 2005, p. 327
23
properly. It is very seldom that resistance is meaningless. Resistance has a function to
decelerate and gives people concerned more time to adjust to the change process. To identify
the resistance to be expected in time, a high level of communication is necessary. Information
should always be unambiguous, communicated fast, continuously and traceable, complete and
honest.27
Resistances need to be degraded skilfully and creation of new resistance has to be
avoided.28 Detailed information in time and participation of all concerned make employees
allies.29 Thus, people can be ‘picked up’ where they are and managers can explain to them
their individual meaning for the change process and future role for the success of the
enterprise. This refers to key persons in particular, regardless whether they are in favour or
against the project. Key persons in favour can be installed as promoters of the change
process.30 A maximum of participation should be granted on all levels of the enterprise. This
can later on generate problem solving by self-help. Any success or achievement of an
intermediate goal shall be published.
Results
To illustrate and explain the complex relations between strategy, psychological and social
determinant s in organisations or organisational units gained from the literature survey it is
appropriate to develop a model. It should be as demonstrative as possible and explain the
phenomenon in an obvious way.
As starting point the model of management process by Johnson and Scholes is chosen.
An extract of this model gives a simplified demonstration about the interdependence between
the environment and the potential resources, outbalancing the focused strategy to achieve the
aims and expectations.
The balance is demonstrated by the cross with right-angles.
In case the environment changes and enforces a strategy change the balance is lost (see
Fig. 3).
Only an adjustment of the resources in the course of a change or integration process will
ensure to regain the balance (see Fig 4).
27
See von Rosenstiel/Comelli, 2003, p. 200ff.
See von Rosenstiel/Comelli, p. 186
29
See Doppler/Lauterburg, 2005, p. 156 f.
30
See Kaune, 2004, p. 19
28
2: Business strategy model (derived from ‘Model of Management Process’ by Johnson and Scholes)
3: Lost balance model (derived from ‘Model of Management Process’ by Johnson and Scholes)
4: Resource adjustment model (derived from ‘Model of Management Process’ by Johnson and
Scholes)
The steps shown so far are transferred into a transformation model, which includes the
elements gathered as the key elements from literature. The model shall show the managers in
praxis at a glance how the process is built up, what is involved, what has to be expected and
what the drive mechanism would be.
In this transformation model for change and integration processes the consecutive steps
reach from the change in the business environment to a change or adjustment in strategy, from
there through a change process and after completion to an evaluation of performance.
The strategic change hits the initial situation of the enterprise which can be subsumed under
the sub-systems of the 7-S Model. The core of the model is the change and integration
potential, layed-out as competences divided into process related and personality related ones.
The core is flanked by two sorts of catalysts, the intrapersonal and the interpersonal catalysts.
Both can either have supporting or restraining effects. The multitude of influences and
dimensions which can be influenced make clear that in such system a considerable number of
individual processes takes place. It is virtually impossible to see such a change or integration
process run through and end up successfully without strong management attendance. In
particular strong leadership may be required during the whole process.
The performance evaluation covers three areas regarding achievements at the economic
level, the non-economic soft fact level and the strategic level.
Discussion
Against the background of a fast changing environment new strategies or strategic adaptions
are needed to be applied, which make changes in the enterprises necessary. Since many of the
change initiatives fail and the same experience was reported from mergers, the main objective
of this paper was to create a model for change and integration management for SME, based on
literature survey and empirical test of the model.
The literature survey was taken as the starting point and delivered also the theoretical
frame of reference of the study. It showed that the environment of the enterprise has decisive
impact on the systems of the enterprise and that in particular the internationalisation and
globalisation have accelerated the need of flexible strategic react ions. Ansoff and Chandler as
well as Johnson, Wittington and Scholes emphasize in their scientific contributions the
importance of the fit between the environment of the enterprise and the strategy respectively
between the strategy and the systems of the enterprise. Structure follows strategy31 and by
consequence change processes are unavoidable.
Despite the complexity of the frequently interacting influential factors the insight
gathered from the literature survey was cast into a model which tries to combine all influential
factors, the potential competences and the driving mechanism by the management as well as
measuring possibilities in one single picture. The advantage of this approach can be seen in
the simplicity of the design. It may give a manager an introduction to the key elements, the
sequence of the process and the interact ion of the influential factors at a glance. On the other
31
Ansoff, Strategic Management, 1979, p. 7
hand the simplicity carries the danger of making things assume to be simple, which is not at
all the case. Thus the model will only be of help and benefit if it leads further to a thorough
preoccupation with its various elements by the managers.
Conclusion
The present study shows that employees and managers are subjected to change processes in
enterprises which are caused by changes in the environment of the enterprises. A change in
the environment, in turn, initiates changes in strategy or adaptions of strategies. The change
processes entailed can extensively and deeply affect the enterprise as a system.
The study shows how complex the scope of topics under consideration is. Various
aspects are closely interconnected. It is a big challenge for the managers to think out fully all
the alternative scenarios and to weigh them. It is unpredictable how those who are affected by
change or integration processes will behave. Nobody can know whether the employees will
follow into a change or offer resistance. The literature survey confirmed that the behaviour of
the individual and interpersonal effects are the big variables in change and integration
processes.
The whole process does not start with the announcement of the changes to expect and
does not finish when the new organisation is established and the new tasks are assigned. It has
its beginning much earlier with strategic deliberations and finds its end mostly not until years,
if at all.
The developed model should be suited to assist managers to identify the factors
involved in change and integration processes. The determination of some key managerial
functions and the dimensions which influence the behaviour of those who manage or are
managed can be supportive to managers Orientation of the managers towards the employees is
required, leadership is certainly supportive to the process.
An outlook and some perspectives may start with the prospect that the relevance of the
subjects ‘change’ and ‘integration’ in business economics will further grow. No manager can
disregard such development unless he wants to take the risk of being overrun by the turbulent
global changes. All the more it will be advisable for managers to work consequently through
this complex material. There are good prospects that well-founded knowledge will definitely
contribute to better profit and more satisfied employees.
However, one can never completely determine how human beings act. Therefore the
course and the extent of the change achievable cannot be entirely planned.
Communication and participation get both a lot of attention in the relevant literature.
The more communication during the process of change and integration is provided, the better
the acceptance by the employees will be.
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