Change Management in Transition Economies: Integrating Corporate Strategy, Structure and Culture
This chapter has analyzed in detail the case study of a successful organizational transformation in CEE. The aim has been to provide a reference point for the development of the decision-making process, the concrete steps necessary to implement the resultant decisions and the pitfalls and problems that are invariably encountered in complex change management projects. It has also drawn attention to alternatives for action that are available to managers, and the connection between actions taken “ that is, the employment of selected instruments of change management “ and their consequences for organizational development, especially in respect of the pace and magnitude of change. At Beiersdorf-Lechia the initial concentration on environmental delimitation and authoritative leadership (Section 7.3.3.1) enabled rapid transformation of the action framework for all members of the organization. Once the new framework was in place, the moves to change the company s culture and encourage participative management eventually resulted in full-scale transformation of the company, which, by virtue of addressing core values and deep, underlying assumptions, went far beyond mere structural and strategic adjustments.
Changing the framework and changing the culture as the two core elements of organizational transition have, however, a number of limitations as well as preconditions for their successful application to which we would like to draw the reader s attention:
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Changing the framework by adjusting constraints on individuals scope for action (environmental delimitation) is associated with relatively high costs, and a short- term orientation, and requires a large power base. While a new framework for action is able to change the behaviour of employees , this might not be sustained, thus necessitating constant monitoring and re-enforcement of the desired behaviour.
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Changing the culture through goal delimitation measures stands a better chance of being sustained in the long term because it tackles underlying values, norms and cognitive maps. The creation of trust and a shared corporate culture considerably reduces the transaction costs of information dissemination and coordination within the organization. Changing the culture, however, requires an extensive personal power base and the development of genuinely open dialogue among all organizational members, which in turn depends on conviction , persuasion and voluntary acceptance of a revised set of personal values and goals. In the case of Beiersdorf-Lechia, the dispatching of a large group of experienced and culturally sensitive expatriates who were also willing to reflect and eventually question their own values and attitudes was a key factor in the success of the transformation.
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The choice of suitable change management instruments and the sequencing of the transformation phases depends heavily on the individual situation and context of each corporation in transition. The specific set of circumstances at Beiersdorf-Lechia and the dynamically changing environment in Poland at the time of takeover in 1997 necessitated the establishment of a totally new framework for action that might not have been, for example, compulsory in the case of organizational change in an institutionally more stable West European economy. Furthermore at Beiersdorf-Lechia the resources (formal and personal power bases) required to change the framework and culture were readily available. This is not the case in CEE companies that lack the stock of resources, managerial skills, popular product lines and strategies of a large international parent company such as Beiersdorf. The latter s successful global brand strategy functioned as an anchor for the entire change process at Beiersdorf-Lechia (Section 7.3.1), and the uninterrupted presence of the Nivea brand in the Polish market since the late 1920s was of considerable advantage to the development of the Poznan subsidiary.
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Preconstructed master plans or ˜one size fits all recipes for change management are inappropriate and potentially dangerous for transforming organizations. Not only does the availability and applicability of change instruments depend on the internal resources of the corporation, but in transition economies such as Poland managers also have to cope with the additional problem of a constantly changing external situation that demands continuous adjustment to economic or legal constraints within the company s environment. The managers at Beiersdorf-Lechia were keen to seize the chance to accelerate the pace of organizational change whenever an opportunity arose. They were conscious of the need to step back regularly from the sometimes turbulent transition process in order to reflect on situational changes and adjust their actions accordingly . They were also able to change their own norms, attitudes and assumptions when the situation demanded mutual cultural adjustment.
Even though each change management project requires individually tailored strategies and managerial instruments, the framework developed for Beiersdorf-Lechia in Poznan is suitable for wider application. The detailed analysis provided in this chapter allows for the identification of general structures and relevant criteria for decision making with regard to the selection, evaluation and sequencing of instruments for change in transition economies in CEE and other regions of the world. The success of Beiersdorf-Lechia shows that the right choices were made in this regard as this former state-owned, production-oriented conglomerate is now a market-oriented, dynamically growing subsidiary that ranks among the top ten affiliates in the international corporate network of the Beiersdorf group.