Radical Decision Making: Leading Strategic Change in Complex Organizations

Leading Strategic Change in Complex Organizations

D. Hruška

• Publisher: Palgrave Pivot
• Year: 2014
• Print ISBN:
  9781137492302
• eBook ISBN:
  9781137492319
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

Radical Decision Making offers a controversial new framework to the conventional strategic change management conversation. While many approaches provide a discussion on a singular level, Dr. Hruška blends theory and research of decision making and social interaction to develop a consistent framework of strategic change.

1

The Radical Decision

Abstract: Radical change, a fundamental change in the way people make sense of their surroundings, occurs on individual level, on organizational level but also on the level of larger systems such as industries and the societies as a whole. Hruška describes types of radical change and deals with the question of idiosyncratic radicalism. By distinguishing between the leader’s perspective and the status quo organizational perspective, Hruška identifies four types of arenas of change implementation: radical, navigated, leaderless and adaptive organizations. Finally, Hruška examines the four phases of the process of radical decision making and radical organizational change: construction of leader’s mental model, search for the new governing metaphor, radical decision taking and rhetoric of radical change.

Keywords: processes of radical decision making; types of radical decisions

Hruška, Domagoj. Radical Decision Making: Leading Strategic Change in Complex Organizations. New York: Palgrave Macmillan, 2015. DOI: 10.1057/9781137492319.0005.

Radical change—a fundamental change of the enacted status quo

Radical change is about breaking the circle of old routines of thinking and acting, our past life. Radical decision making is risky business, but it is often the only way to reach the goal. It is a fact of life that trying to leap an abyss with more than one jump is not a good idea.

Radical decision making as described in this book gives a rationale for distinguishing strategic and routine behavior through enactment theory. In the business administration context, radical decision is about making a fundamental change in the business model, which requires changes in company strategy, structure and culture. At times, such change can be an effect of an outside disturbance but it can also result from the emergence and the activities within the organization. That is, systems are capable of producing structures that may disturb and alter the very system that produced them. The organizational leadership is in charge of making the disturbances happen. It needs to understand and be able to manipulate with the patterns of complexity. In conducting radical change, leaders are symbols, rather than ship captains navigating their vessels to the port. The complex organizations wobble on the edge of chaos—they are sufficiently active to be dynamic but not so active as to risk recurrent disorder. Radical change occurs when they step over that edge to embrace a fundamentally different identity.

What do we mean when we say that we will make a radical decision? Or that that situation demands radical change? The term “radical” has many meanings, but it always means that some fundamental change is in question. From an etymological perspective, the word comes from Latin radix that indicates the root. So, just as roots are crucial for life and fundamental for understanding of the organisms, so the radical decision must be of profound impact and importance. To say that the radical decisions are those that fundamentally change the organization is not good enough. In order to be able to use the concept of radical decision making, we need to know what exactly a “fundamental change” is. In a nutshell, fundamental change is a change of the way in which people understand the organization. It is the understanding of the organization and acting in respect to this meaning that constitutes the organization’s “roots.”

At first, the term “meaning of the organization” can seem to be vague and hard to define, but it is not. People in every organization have a feeling of “what the organization is all about” or “how things are done around here.” The best way to understand the concept of organizational sense is to take a look at the ways through which it is enacted. As we have discussed in the Chapter 2, the word “enactment” denotes the fact that our interpretations generate actions that create challenges to which we have to respond. It is a construct based on both—interpretations and actions.

The medium for radical change, organizational enactment, integrates the perspective that the generic routines and familiar patterns of organizational activity are, usually, reconstructed and reaffirmed by the people’s interaction. After the individual interpretations have been enacted and stabilized through the activity, they act as a medium for carrying out all organizational action. Since the organizational enactment is shared, each member of the organization is able to identify his contribution to its construction and, what is more important for definition of radical perspective, he is able to detect changes within the structure. Although the organizational enactment is in a state of constant flux, through the activities of the people that constitute the organization, it is still steady in its fundamental characteristic—its meaning. Of course, people may not fully agree on the perception of the situation in hand, but the thread of coherence in their interpretations and consecutive actions is what keeps the sense of an organizational enactment stable.

The fundamental roles of organizational enactment are threefold—predetermination of future organizational behavior, interpretation of previous experience and initiation of antagonism toward different approaches. A fundamental characteristic of organization enactment, however, drives from the elaborated thesis that organizations choose their environment from a number of options, and then subjectively perceive it. As Starbuck (1976, 1081) asserts, the selection process as well as the process of perception is incremental, spontaneous and strongly influenced by social norms and habits. Since the process is socially constructed, generic routines and familiar patterns of activities tend to recreate and reaffirm the individual’s interaction within the organization. Therefore, there is only a slight chance that there will often be a significant divergence in the collective perception of the organization. The fact allows the organizational enactment to be defined as the foundation for radical decision making.

Decisions that do not result in a fundamental modification of organizational enactment are referred to as adaptive decisions. Adaptive change is a conservative approach to the transformation of an organization, based on an attempt to keep as much of the “old” as possible in building the “new.” Radical and adaptive decisions are not a question of intensity but a question of sort. Only in implementation, through change of social constructs, as I will discuss in the last chapter, the decision result obtains continuum. Based on the change of the meaning of the organization, a new taxonomy of decisions and organizational change can be put in place. If the leader attempts to change enacted meaning of the organization, the decision to do so is the radical decision. If the change of meaning is successfully conducted and the new meaning is enacted, we can say that radical change took place. In other case, if the decision is about changing the elements of the situation in hand without interfering with its meaning, the decision is called adaptive decision, and it consequently leads to adaptive change.

The taxonomy of organizational decisions, based on change of meaning in the problem solving situation, fits with the taxonomy of decisions based on the level of structure of the problem situation developed by Herbert Simon (1977). While the Simon’s taxonomy looks at the present situation it terms of our previous experience, the taxonomy of change of meaning looks at the future in terms of what is going on in the present. The two types of decisions derived from the Simon’s taxonomy are programmed and unprogrammed decisions. From an etymological perspective, decision taxonomy of programmed and unprogrammed stems from computing. The program is detailed guidance to the system on how to respond to the complex environment in the performance of a particular task. A set of rules and procedures is by definition a program. Unprogrammed decisions are the ones for which the system has no pre-specified procedures and solutions. In order to solve these situations, the decision maker relies on the general capacity for intelligent adaptive action (37–41). Computer analogy is useful to the decision model because it indicates the term “general mechanism for problem solving,” which, unlike the single “program,” treats every situation in a specific way. Simon argues the usefulness of programmed decisions through the high cost of usage of the “general problem solving mechanism” and says it is advisable to reserve capacities of that mechanism for decisions that are “truly novel” (47). Within this explication of unprogrammed decisions, Simon gives an indication of taxonomy of decision by the use of “general problem solving mechanism.” Change of the central organizational construct—a radical decision—is certainly a decision that requires the use of cognitive mechanisms that Simon defined as “truly novel.” Programmed decisions are always adaptive. The meaning of the organization does not change, neither for the decision maker, nor for the social context in which the decision is made. It is not so with the unprogrammed decisions. Poorly structured problems can be addressed with the adaptive and the radical approach. Besides this essential difference, taxonomy of decisions on the basis of change of meaning differs from the classical taxonomy of programmed and unprogrammed decisions on three other important issues. First, it is impossible to say whether it is better to make radical or adaptive decision in a specific situation. Second, the decision to use the existing sense of the situation or to change it is of binary nature—only in the implementation, through change of social constructs, the decision result obtains continuum. Third, decisions become adaptive or radical at the moment of the decision, not in the phases of decision making process which follow the decision moment, as it is the case with programmed and non-programmed decisions. Subsequent chapters will shed more light on these characteristics of radical decisions.

Types of radical change

The radical change takes place in settings that range from the individual level to the level of complex social systems. At least four levels of radical change can be identified: individual as a change of personal identity, organizational as a change of collective identity, industrial as a change of rules of the game and society as a change of ideology.

Individual radical change is about profound and sudden change of identity. Conversions of all kind, especially religious conversions, are best-known individual radical decisions. The decision to “come out” as a gay person twenty years ago or to be an emancipated woman two hundred years ago are also illustrations of radical action. Individual radical decisions depend only on the person making it, in other words, they do not require decision maker’s rhetoric effort as other radical decisions do. What constitutes a radical decision depends on the person’s identity before the change as well as on his surroundings. Eating a neighbor is perhaps radical for a London vegetarian but not necessarily for a New Guinea cannibal.

Organizations, as groups of people who work together to achieve a collective purpose, are also defined by their identity. Change of collective identity is the business of organizational radical decision making. Organization’s identity is enacted in a way “things are done around here” and is constructed by everybody in the organizations; first and foremost, of course, by the decision makers. The organizational enactment is a resultant of one concept that acts as the corner stone of individual interpretations of the organization. If this governing metaphor is altered, we have a radical organizational change. Dutch electronics giant Phillips, for instance, has replaced or re-assigned more than half of the top two hundred managers and put about 1,800 staff through programs with a focus on performance culture in past two years. Another well-documented example is a change in enactment of AOL and Time Warner during their failure of achieving synergy from the 2001 merger. The example of radical organizational change is also Nokia’s history of streamlining its businesses over and over since it was founded in 1865. It takes a radical leap from ground wood pulp mill in South-western Finland to the world leader in mobile phones sales that Nokia was fifteen years ago.

Radical change can take place in the context of a number of organizations that strive to achieve the same purpose. Discipline of strategic management defines this context as industry. Same as organizations, industries have rules of the game, status quo position, which can be radically altered. Goal of strategic change is position of competitive advantage. Competitive advantage can be achieved by the introduction of disruption within the industry’s enacted environment. The fundamental question of the book is how we can generate and introduce such disruptive initiative. Technology changes are pivotal example of such disruptions. The invention of fire and the wheel have indeed radically changed enacted ways of hunting and building at the time. Transition from fuel to energy cars is one of today’s radical shifts. Some other examples of radical industrial decisions are: introduction of novel sale channel, like Amazon did; introduction of a novel industry standards, like Microsoft’s operating systems based on graphic interface in respect to IBM’s command-line interface; change of industry’s focus, like Apple did in the mobile phone industry by changing focus from technical features to design. Another good example is the change of practice of insurance companies in respect to alternations in the United States health care system enacted in 2010 by the Obama administration. Outside the business context, in warfare, the radical change was the importance of machineguns in respect to cavalry in the First World War.

Finally, the radical change can take place in the whole society. The culture is influenced by the governing metaphor which forms an ideology—an enacted way of thinking and living which is most visible in the interaction. Such radical shifts were, for example, the rise of Christianity with love as a governing metaphor, the French Revolutions with the idea of La Liberté or the communism with the governing metaphor of absence of social classes. These and other ideological shifts are always well documented and as such present a good material for learning about the processes of radical decisions making.

The focus of the book is a radical decision making in complex organizations. Two other social systems—industry and society—can also be seen as organizations. There are, however, certain differences between the two and the organization. The industry is made out of organizations so that industrial enactment tends to be more stable over time than the organizational enactment. The society, on the other hand, has less defined purpose than the organization that causes a decrease in a number of problem solving and decision making opportunities. However, the same logic and the same process apply for each of the elaborated social systems. So far as the individual radical change is concerned, the organizational change happens when people in organizations change their mindsets. That is when they change the ways of how they think and act in any social system. In this way, all radical decisions are primarily individual—if people in the organization change, the organization will change as well.

Idiosyncratic radicalism of leaders and organizations

Besides the explication of the social systems in which the radical decision making takes place, the organizational change can be observed from the perspective of idiosyncratic radicalism of leaders and organizations. In respect to radicalism of the decision from the leader’s and organizational perspective four types of organizations can be identified: radical, navigated, leaderless and adaptive organizations (see Figure 1.1).

The decision can be radical for the leader and the organization. Sudden and broad changes in the environment can force people and organizations to change the ways of doing things and force them to find the new solutions. The leader is the one who sees the new paradigm and persuades the organization to follow him. Such case is the Cherokee leader Sequoyah. According to the US Census of 2010, the Cherokee Nation is the largest of the 566 Native American tribes in the United States. They have assimilated numerous cultural and technological practices of European American settlers including writing. Around 1809, Sequoyah, a Cherokee silversmith who regularly traded with white settlers, and saw advantages of writing, although he spoke no English, began developing a written form of the Cherokee language. Even though the implementation was harsh, by the 1820s, in Georgia, the Cherokee had a higher rate of literacy than the whites around them (Walker and Sarbaugh 1993, ...

Table of contents

• Cover
• Title
• Introduction
• 1  The Radical Decision
• 2  Leading Complex Organizations
• 3  Building Mental Models for Effective Leadership
• 4  Driving Radical Change
• 5  The Loadstar
• 6  Taking a Radical Decision
• 7  Rhetoric of Radical Change
• Bibliography
• Index