11	Processes of Strategic Change: Some Patterns

The research reported in this book has afforded an unusual opportunity to descriptively examine, in a comparative mode, long-term processes of continuity and changing. The time has come now to reveal some of the patterns in these descriptive accounts of changing, first of all in this chapter by focussing on five of the reported cases of strategic organisational change, and then in Chapter 12 by comparing and contrasting the different pathways of development, impact, and fate of specialist OD resources in the four largest divisions and the corporate headquarters of ICI.

The initial purpose of this chapter is to move away from the empirical detail of the ICI cases of change, to summarise elements of the literature on strategic change, and thus to clarify the conceptual starting point for identifying some of the patterns in the processes of strategic change in ICI.

Following the approach taken by Pettigrew (1977) and Mintzberg (1978) strategic changes are viewed as streams of activity involving at various times the differential attention of individuals and groups, which occur mainly but not solely as a consequence of environmental change, and which can lead to alterations in the product market focus, structure, technology, and culture of the host organisation. Strategic is just a description of magnitude of change in, for example, structure and organisational culture, recognising the second-order effects, or multiple consequences of any such changes.

Although single strategic decisions have been referred to in the previous case study chapters, and it is recognised that changes of note can follow from any one strategic decision, it should be clear that the analytical approach favoured in this research has not been to treat the single decision as the unit of analysis. Strategic decision-making and change are here regarded as continuous processes. Understanding strategic changes as continuous processes, with no clear beginning or end, allows for the analysis of both discrete and identifiable decision events, the pathways to and outcomes of those events – what may be called the front stage of decision-making; and indeed the back stage of decision-making, the processes by which novel ideas for change gain currency and legitimacy in the organisation, or are otherwise suppressed and immobilised and never reach a form where they can be openly debated, decided, and acted upon.

Strategic change processes are best understood in context. Drawing on Mintzberg's (1978) useful distinction between intended and realised strategy, strategy is operationally taken to mean that which is realised in practice through consistency in a stream of actions and decisions over time. Part of the context is the location of strategy in time. Yesterday's strategies will provide some of the pathways to and inputs for today's strategies; and today's strategies will have a concept of the future built into them. The consequences of the implementation of today's strategies will provide part of the context for tomorrow's strategies. But time is but a segment of the context. Context also includes the social, economic, political, and business environment of the firm and changes thereof, and various features of the internal context of the firm, the structures and systems, leadership arrangements and processes, the culture or cultures of the organisation, and the systems and dynamics of control and power in the organisation, all of which mediate what is seen and acted upon in the way of environmental change. As we have seen, the genesis of strategic change is often to be found in the advocacy by a small number of people of a performance gap arising from some perception of an incipient or actual environmental change and the internal structure and organisational culture of the firm. But differential perception by various parties inside the organisation of a changing context which is only being partially understood and acted upon can provide not only the tensions and enabling conditions for new strategies to evolve, but also the dynamic conservatism (Schon, 1971) to sustain in place the existing definitions of what the organisation's core issues are, and how they are to be continued to be tackled through customary views of strategic content and process. Therefore the real problem of strategic change is anchoring new concepts of reality, new issues for attention, new ideas for debate and resolution, and mobilising concern, energy, and enthusiasm often in an additive and evolutionary fashion to ensure these early illegitimate thoughts gain powerful support and eventually result in contextually appropriate action.

The starting point for this analysis of strategic change is the notion that formulating the content of any new strategy inevitably entails managing its context and process. Thus theoretically sound and practically useful research on strategic change should involve the continuous interplay between ideas about the context of change, the process of change, and the content of change, together with skill in regulating the relations between the three. Posed in this way the development of strategic change in the firm is seen as a long-term conditioning and influence process designed to establish the dominating legitimacy of a different pattern of relation between strategic content, context, and process. However, in examining a large enterprise such as ICI over a 20-plus year period continuity is a good deal easier to see than change. What is apparent is the continuity of existing dominating ideas in the firm, of existing frameworks of thought with their associated structures, systems and power relations all being used to interpret changes in external and internal context and continue the existing patterns of thought and action about strategy. Such continuity of strategic content is a function, as Huff (1982) has suggested, of the dominating frames of thought which develop as firms experience and appreciate the business and economic conditions of certain industry sectors. The continuity may also be interpreted as Selznick (1957), Child (1972), Normann (1977), Miles (1982), and Boswell (1983) have indicated, as a product of the values and assumptions of the powerful groups who control firms over an era, and in consequence of the deep-seated political and cultural roots of strategy.

But the ICI data also reveal periodic patterns of challenge, and eventually change, from the existing order of things. Of insubordinate minorities, often in very senior line positions sensing environmental change and organisational inertia, developing a widening caucus of concern around new problem areas for the firm, using cognitive and analytical skill to fashion new rationalities and ideas to compete in the strategy formulation process, and seizing on the opportunities provided by environmental change to put together new marriages of strategic content and context. The rise of these new rationalities and strategic frames may be seen as long courtships, in which novel and opportunistic processes are used to find mutuality between strategic content and context; in which instant marriages occur between strategic content, context, and process as contexts rapidly change, and existing solutions now acquire legitimacy for newly acknowledged problems in the new context. As we shall see, critical to the success of these long processes of courtship between strategic content and context are the interest, attention, and persistence of the would-be innovators and their supporters. Once established, the new marriages between strategic content and context often lead to rapid changes initially in organisational structure, people, and systems, followed by greater clarity in strategic articulation and direction, long periods of stabilisation and adjustment as the structural, systems and possibly cultural messages of the revolution are implemented and then more widely understood, and then another slow dissolution of the existing marriage between content, context, and process as circumstances and contexts, people, problems and available solutions change, and new courtships begin. In this way patterns of strategic change at the level of the firm may be understood in terms of long periods of continuity, learning, and incremental adjustment interspersed with hiatuses or revolutions featuring abnormally high levels of change activity.

In the review in Chaper 1 of the literature on strategic change and organisational change and development, attention was drawn to the various currently available process theories of choice and change. Necessarily brief reflections were offered on process theories using the language of rationality, bounded rationality, garbage can, incrementalism, and politics. Some attempt was made to highlight the analytical power of each of these approaches as separate spectacles looking at the same organism, but overlaps between these process theories were identified, and space was taken to indicate how so-called political and cultural analyses of process may be profitably combined and refined. Without rehearsing the arguments of Chapter 1 comprehensively here, it is important in further setting the scene for identifying some of the patterns in the ICI data on strategic change to remind the reader of some of the key findings and conclusions about process approaches to choice and change made earlier in this book.

During the 1970s progress has been made by authors such as Bower (1970), Allison (1971), Pettigrew (1973), March and Olsen (1976), Mintzberg (1978), and Quinn (1980) to rescue the linked literature on strategic decision-making and change from its prevailing concern with rational analytical schemes of intentional process and outcome, and to begin to see strategic decision-making and change in a variety of process modes. The kinds of process theories of choice and change proposed by the above authors in the main tend to use the rational deductive view of problem-solving propounded by the neoclassical theory of the firm, and its equivalents in the strategy literature (Andrews, 1971; King and Cleland, 1978), as a whipping boy. As applied to the formulation of strategy the rational approach describes and prescribes techniques for identifying current strategy, analysing environments, resources and gaps, revealing and assessing strategic alternatives, and choosing and implementing carefully analysed and well-thought-through outcomes. Depending on the author, explicitly or implicitly, the firm speaks with a unitary voice, can be composed of omnipotent, even heroic general managers or chief executives, looking at known and consistent preferences and assessing them with voluminous and presumably apposite information, which can be organised into clear input-output relationships. Thus the early preoccupation in the strategy literature (Ansoff,¹ 1965; Andrews, 1971) with the analytical content of strategy, with limited views of context, an avowedly rational picture of business problem-solving, and no developed theory of strategic change essentially takes as given what the incremental, political, and garbage can views of process seek to explain. Igor Ansoff's more recent writing (1979) is much more sensitive to political and cultural views of strategic change.

In the strategy literature we have the empirical studies, in particular of Bower (1970), Mintzberg et al (1976, 1978), and Quinn (1980) to thank for challenging the rational–analytical views of strategy formulation and change. Now strategy was to be treated not as an output but as a process. With the counterbalance of the above empirical process studies, strategy formulation was now accepted as a multi-level organisational activity, and not just the province of a few, or even a single general manager. Outcomes of decisions were not just a product of rational or boundedly rational debates, but were also shaped by the interests and commitments of individuals and groups, the forces of bureaucratic momentum, gross changes in the environment, and the manipulation of the structural context around decisions. With the view that strategy development was a continuous process, strategies could now be thought of as reconstructions after the fact, rather than just rationally intended plans. The linear view of process explicit in “strategy formulation is followed by strategy implementation” was questioned, and with increasing interest in enduring characteristics of structural and strategic context (Bower, 1970; Burgelman, 1983), Chandler's (1962) dictum that structure followed strategy was modified by evidence indicating why and how strategy change could follow structural change (Galbraith and Nathanson, 1978).

However, the empirical study of strategic change with the greatest overlap from an interpretative and empirical view with this study of ICI is Quinn's (1980) book, and its derivative (Quinn, 1982), suggesting that strategic change can be understood as a process displaying patterns of logical incrementalism. Quinn (1980:56) conceives strategic change as a joint analytical and political process in which executives are described as, and recommended, “to proceed flexibly and experimentally from broad concepts to specific commitments, making the latter concrete as late as possible. Strategic change is thus seen to emerge as a cautious, step-by-step evolutionary process, where executives muddle through with a purpose.” While recognising that the empirical variant of incrementalism which he describes can include some element of formal analysis, Quinn (1982) is clear that large firms do not make strategic changes through the rational–analytic schemes often described in the literature on corporate planning.

It is indeed Quinn's recognition of the process, as well as the cognitive limits on the management of strategic change, where his writing is particularly valuable descriptively and prescriptively. These process limits, the concern with the timing and sequencing of action and events in order to build awareness, comfort levels, and consensus for strategic change are easily recognisable in the cases of strategic change reported in this book. But if the continuous, evolving, political, consensus-building view of the process of strategic change espoused by Quinn (1980, 1982) fits well with elements of these data on ICI, the corollary of that view of process, that strategies emerge in a continuous incremental and thereby additive fashion, is contradicted both by Mintzberg's (1978) findings that strategic changes occur in spurts, each followed by a period of continuity, by Boswell's (1983) useful empirical observations on phases of policy concentration in three steel companies, and as we shall shortly further emphasise, the periods of revolutionary strategic change in ICI interspersed with eras of learning and incremental adjustment.

Of the various process theories of choice and change mentioned in Chapter 1, the one developed the fullest, and seen to have the greatest potential value in explaining continuity and strategic change, is the one which combines a political and cultural analysis of organisational life (Pettigrew, 1973, 1977, 1979; Pfeffer, 1981; Peters and Waterman, 1982). The interest in culture directs attention to sources of coherence and consistency in organisational life, to the dominating ideas or ideologies which provide the systems of meaning and interpretation which filter in and filter out environmental and intra-organisational signals. The recognition that organisational culture can shape and not merely reflect organisational power relationships directs attention both to the ground rules which structure the character of the political process inside the firm, and the assumptions and interests which powerful groups shield and lesser groups may only with fortitude challenge. The acts and processes associated with politics as the management of meaning represent conceptually the overlap between a concern with the political and cultural analyses of organisations. A central concept linking political and cultural analyses particularly germane to the understanding of continuity and change is legitimacy. The management of meaning refers to a process of symbol construction and value use designed to create legitimacy for one's ideas, actions, and demands, and to delegitimise the demands of one's opponents. Key concepts for analysing these processes of legitimisation and delegitimisation are symbolism, language, ideology, and myth (Pettigrew, 1976, 1979).

As Hardy (1983) and Astley and Rosen (1983) indicate, the important feature of this cultural treatment of organisational politics is that it helps to provide a framework to examine not just front-stage decision-making and power, but also back-stage decision-making and therefore control. The front-stage view of decision-making and power closely resembles Lukes's (1974) one-dimensional and two-dimensional views of power, while the interest in deeper processes of control conforms to Lukes's third dimension of power. As Hardy (1983) has succinctly put it, a concern with both power and control as explanations of strategic choice and change processes, would in effect correspond to two uses of power. Power used to defeat competition in a choice or change process, and power used to prevent competition in a choice or change process. In both of these processes there would be an explanatory role for unobtrusive systems of power derived from the generation and manipulation of symbols, language, belief and ideology – from culture creation; and from the more public face of power expressed through the possession, control, and tactical use of overt sources of power such as position, rewards or sanctions, or expertise.

There are two further essential points to derive from the above way of thinking about process. The first is that structures, cultures, and strategies are not just being treated here as neutral, functional constructs connectable to some system need such as efficiency or adaptability; those constructs are viewed as capable of serving to protect the interest of dominant groups. This means that not only can the existing bias of the structures and cultures of an organisation in general terms protect dominant groups by reducing the chances of challenge, but features of intra-organisational context and socioeconomic context can be mobilised by dominant or aspiring groups in order to legitimise existing definitions of the core strategic conerns, to help justify new priorities, and to delegitimise other novel and threatening definitions of the organisation's situation. These points are as pertinent to understanding processes of choice and change as they are to achieving practical outcomes in strategic change. As Normann (1977:161) has so aptly put it “the only way to bring about lasting change and to foster an ability to deal with new situations is by influencing the conditions that determine the interpretation of situations and the regulation of ideas”.

The above political and cultural view of process gives a central place to the processes through which strategies and changes are legitimised and delegirimised. The content of strategic change is thus ultimately a product of a legitimisation process shaped by political/cultural considerations, though often expressed in rational/analytical terms. This recognition that intervening in an organisation to create strategic change is likely to be a challenge to the dominating ideology, culture, and systems of meaning and interpretation, as well as the structures, priorities, and power relationships of the organisation, makes it clearer why and how the processes of sensing, justifying, creating, and stabilising strategic change can be so tortuous and long.

The preceding discussion of some of the currently available theories of choice and change will have alerted the reader to the virtues of trying to understand strategic change in terms of patterns of revolution and evolution, of long processes of logical incrementalism, and of the role that organisational culture and politics in the firm can play in creating the conditions for and dynamics of continuity and change. Before launching into a closer examination of some of the patterns in the five ICI cases of strategic change, the recognition of the potential value of the revolution–evolution, incremental, and political–cultural approaches to the process analysis of change reaffirms one of the other starting points of this book. Beware of the singular theory of process, or indeed of social and organisational change. Look for continuity and change, patterns and idiosyncrasies, the actions of individuals and groups at various organisational levels, and processes of structuring. Give history and social processes the chance to reveal their untidiness. To understand strategic change, examine the juxtaposition of the rational/analytical and the political, the quest for efficiency, growth, power and business survival, the role of exceptional men and of extreme circumstances, the vicariousness of chance, the enabling and constraining forces of the environment, the way organisational culture shapes people's interpretations of environmental forces, and explore some of the conditions in which mixtures of these occur.

With the scene now partially set, the remainder of this chapter is divided into three sections. The first section takes a broad look at the overall pattern of continuity and change in ICI over the period from the late 1950s until 1983, and assesses the evidence for so-called revolutionary and incremental periods of organisation development. This is followed by a section which picks up and examines the similarities and differences between the processes of creating strategic change in five different parts of ICI. These are the corporate strategic change process over the period 1972–83, the changes in the governance, structure, manpower, and culture of Mond Division in the period 1973–83, the period of social innovation in Agricultural Division whilst George Bridge was personnel director between 1962 and 1967, and the changes in the top structure of Petrochemicals Division made between 1970 and 1973. From the perspective of 1983 the first two of the above cases show clear evidence of strategic change after long periods of persistent though at times unfocussed advocacy. The Agricultural Division and Petrochemicals Division cases with the benefit of greater historical perspective show to varying degrees evidence of change and then regression from change after key individuals had been removed from those divisions, and the fifth case, Plastics Division between 1969 and 1979, demonstrates the absence of strategic change. The final section of the chapter, managerial activities in strategic change, distills some of the practical messages about the management of strategic change evident from the ICI experience.

THE OVERALL PATTERN OF CHANGE: REVOLUTION AND INCREMENTAL ADJUSTMENT

One of the many analytical difficulties of trying to understand processes of social and organisation change is the problem of over-availability of metaphors and images associated with the various theories of change. The choice varies on a spectrum between evolution and development, life cycle and phase, continuity and flow, contradiction, revolution, intrusion, and crisis, with the problem of choice exacerbated by the implicit world view and model of man contained in these various sub-theories and metaphors.

An advantage of the otherwise factious and complicated situation in sociological theory where structural functionalists, neo-evolutionists, symbolic interactionists, power and conflict theorists, and Marxist and Neo-Marxist all propound different theories of societal change, is that the debates which have ensued have teased out into the open some of the implicit analytical assumptions and ideological posturing contained in those approaches, see Nisbet (1969) and Eisenstadt (1978) for critical reviews of the alternative theories of social change. In organisation theory, however, even with the appearance of useful books such as Burrell and Morgan (1979), interest in theorising about organisational change and the implicit assumptions of those theories is a good deal more rudimentary, and biological metaphors such as life cycle are used in a largely uncritical fashion (Kimberly and Miles, 1980).

In the literature on the evolutionary development of the firm, (Chandler, 1962; Wrigley, 1970; Scott, 1973; and Greiner, 1972) there has been a tendency to present normative and historically consistent views of corporate development stages. Thus depending on the author three or four growth steps are postulated, each with its own strategy and structure. If there is natural scepticism about the analytical value of seeing the firm move naturally and inevitably through a set of stages, what is the view of the process of moving from stage to stage in those evolutionary models? Leontiades (1980) collects together the Chandlerian and Greiner models of corporate development and labels their view of process as providing a metamorphosis view of change. Evolutionary movement occurs from stage to stage but not through a continuous process, but a series of interrupted stages. The trigger or triggers necessary to move the firm from one stage to another come from environmental disturbances of sufficient magnitude and impact that the firm must now react and change its strategy and structure to cope with the new set of pressing circumstances.

As I have implied, there are a number of problems with this attempt to explain organisational change. One has to be doubtful about the simple determinism of stages, about implied notions of progressive linear development to higher levels of growth or greater “maturity” and the reification explicit in statements about the firm behaving, rather than individuals or groups producing an effect which could be labelled as the firm behaving. However a potentially valuable feature of such metamorphosis models of change is the explanatory role played by environmental disturbance in creating change.

Recent theoretical and empirical work on strategic change by Mintzberg (1978), Mintzberg and Waters (1982), Miller and Friesen (1980), and Miller (1982), has extended this thinking about environmental disturbances to produce some interesting ideas and empirical evidence about identifiable revolutionary and evolutionary periods as firms change. Using retrospective analyses of the step-wise escalation of the Vietnam War and patterns of strategic change in Volkswagen, Mintzberg (1978) is able to identify two key patterns. One was the tendency of a strategy to have a life cycle from conception to decay and death, and secondly a tendency for strategies to change not in a continuous incremental fashion but rather for change – even incremental change – “to take place in spurts, each followed by a period of continuity” (Mintzberg, 1978:943). Miller (1982) distinguishes between quantum, revolutionary, and evolutionary changes. Quantum changes occur when many elements of the organisation change is a major or minor way within a brief interval. Revolutionary changes imply quantum changes “radically transforming many elements of structure, while change is incremental or evolutionary when it is piecemeal and gradual, i.e. when only a few elements change either in a minor or a major way” (Miller, 1982:133). Using Kuhn's (1970) idea of scientific development, Miller (1982) then goes on to argue that organisations have tradition-bound periods punctuated by non-cumulative revolutionary breaks. Organisational changes, it is argued, tend to come in packages. In fact Miller and Friesen (1982) also contend from their data that high-performing firms are more likely to make quick, decisive, and dramatic changes rather than rely on slow incremental adjustments which leave the organisation from a strategy and a structure point of view in a continuing state of disharmony with their business environment.

The Mintzberg (1978), Miller (1982) and Miller and Friesen (1982) work usefully identify both the ebb and flow of individual strategic concentrations in the firm and also the existence of periods of revolutionary and evolutionary change; what these authors do less precisely is to develop a process theory which links together the periods of high levels of change activity and low levels of change activity and thus begins to explain the timing and relative intensity of those periods. An approach, again relying at least partially on a crisis theory of change which does have more to say about precrisis, crisis, and stabilisation, and thus the linkages between revolutionary and evolutionary periods is that offered by Jonsson and Lundin (1977), Starbuck, Greve and Hedberg (1978), and Brunsson (1982). By introducing more explicitly into their analysis the importance of organisation ideologies and standard operating procedures both as inhibitors and, in the case of changing ideologies, precipitors of change, these authors offer a more satisfactory way of explaining revolutions and evolutions, and the links between high levels of change activity and lower levels of change activity in organisations. Brunsson (1982) in an elegantly written paper argues that organisations periodically jump from one predominant ideology to another, and that radical changes have to be preceded by and initiated by ideological shifts. To the question, but how are ideologies changed, Brunsson (1982) answers: as a result of a combination of externally driven crises, shifts in leadership, and the properties of ideologies themselves. The most stable ideologies are those which are vague and widely applicable, sharper more definite and particular ideologies are easier to question and eventually debunk in the face of a changing reality. Crucially Brunsson (1982) also argues that the periods when ideological shifts are in process, i.e. when the dominant ideology has not yet been debunked and when any aspiring new ideology still lacks a critical mass of support, are poor contexts for action. This is because ideological inconsistencies increase uncertainty and make it difficult to marshal the strong commitments and high levels of motivation and energy which are necessary to create radical organisational changes. Thus, he argues, an ideological shift has to be completed before radical action in the change sphere can begin.

As we shall see the overall pattern in the ICI data on strategic change indicates further confirmation both of the waxing and waning of particular strategies in the firm, and for changes to tend to occur in radical packages interspersed with longish periods of both absorbing the impact of revolutionary action, and then coming to terms with the fact that further changes are eventually necessary. Crucial to the timing of such radical actions are real and constructed crises (Pettigrew, 1983; In Press), changes in leadership and power, and the transformation of organisational ideologies.

An examination of the corporate development of ICI over the period from the late 1950s until 1984 reveals three periods of high levels of change activity. Two of these three periods, the ones between 1960 and 1964 and between 1980 and 1984, could be sensibly labelled as revolutionary periods in that they featured ideological, structural, and business strategy change, whilst the third period, between 1970 and 1972, was a period of substantial if lesser change when further structural change was made and elements of the ideological and business strategy changes made ten years earlier were accelerated or de-emphasised. The periods in between these packages of changes were occasions for implementing and stabilising changes, and most notably between 1973 and 1980, eras of organisational learning when ideological justification was prepared for the revolutionary break between 1980 and 1983.

Each of these periods of high levels of change activity were associated with world economic recessions, with their associated effects on world chemical production, markets, and prices and in turn on ICI's relative level of business performance. Table 31 shows the peaks and troughs in ICI's profits and ratio of trading profit to sales over the period 1958 to 1982.

TABLE 31 ICI record of sales, profits, and ratio of trading profit to sales in peak and trough years, 1958–82 (£m)

	Sales	Profits	Ratio trading profit to sales
1958 1960	463   558	51   93	11.0 16.6
1961 1964	550   720	65 113	11.8 15.7
1966 1969	885 1355	99 190	11.2 14.0
1971 1974	1524 2955	130 461	8.5 15.6
1975 1979	3129 5368	325 634	10.4 11.8
1980 1981 1982	5715 6581 7358	332 425 366	5.8   6.4   5.0

Since 1958 there have been 5 years of peak profits followed by downturns of varying severity with each cycle lasting from 4 to 5 years. The improvement from trough to peak has been 82% (1958–60), 74% (1961–64), 92% (1966–69), 255% (1971–74), and 95% (1975–79). The period from 1980 to 1983 evidenced a step-wise change in macro-economic trends, a sustained recession, a dramatic downturn in ICI's profitability, and as we saw in Chapter 10 major structural, manpower, ideological, and business strategy change.

The two periods of revolutionary change between 1960 and 1964 and 1980 and 1984 were preceded by and further reaffirmed ideological shifts, were associated with, in the first occasion the 1958 and 1961 economic and business downturns and on the second occasion the 1980–83 recession. They were also occasions when new business leadership was supplied by men who had not spent their whole career in ICI. In 1960 Paul Chambers (later Sir Paul Chambers), a former senior civil servant and the first non-technical man for some years, was appointed Chairman. He began to emphasise financial and commerical management skills in a management culture heavily preoccupied with science and technology. And in November 1981 the announcement was made that an ex Naval intelligence officer, John Harvey-Jones, was to be Chairman of ICI. His ideological contribution is emerging as a lessening of bureaucracy and centralisation in ICI, sharper business accountabilities, and a greater emphasis on entrepreneurial skills and continuous change into the 1980s.

Both revolutionary change periods witnessed organisational structural and business strategy changes, with the structural changes occurring in a cumulative way over a relatively short period of time, and the business strategy changes emerging and being implemented rather more slowly after the ideological and structural changes had been justified, and then introduced.

Looking for a moment at the business and economic context of ICI prior to the 1960–64 changes, the situation was of a slow build-up of environmental changes. The world economies were picking themselves up after the Second World War, and aided by the productive stimulus of the Korean War and general rises in consumer expectations and expenditure, the UK economy was featured by full employment, minimal inflation, and for a time acceptable relative levels of economic growth. Although the world chemical industry was just about to enter its great period of growth and capital investment based on the rise of the organic chemical sector with relatively cheap oil feedstocks and burgeoning demand for plastics and artificial fibres, the end of the protective cartels and a lot of new entrants into the industry produced a more international, and a more competitive industry. However, as Roeber (1975:33) argues, the break-up of the old cartels did not change old attitudes in ICI. For a time the demand for ICI's products appeared to exceed their capacity to supply that demand. Sales control departments allocated product rather than sold it. In the absence of financial or market pressures those functions and skills had no reason to develop in ICI, and in an era of “profitless prosperity” there was little inducement in ICI to break new ground in technical, market, managerial, or labour productivity matters.

However, as a number of elements in the ICI business environment began to change together so the pressures became more tangible. New technical areas opened up in the industry. Some of the older strengths of the company were under threat because of technical obsolescence or declining industries which had provided traditional markets. Full employment, growing unionisation and changing attitudes in the workforce meant relatively high manning levels and made ICI's personnel policies begin to look less progressive and less effective.

The trigger for change in ICI came in 1958 when a US-led recession unmasked the general excess of demand over supply in organic chemicals. Faced with a substantial drop in home markets in 1958, the big US chemical firms began hunting for customers in Continental Western Europe and the UK. Chemicals were “dumped” in Europe, the overcapacity led to falling prices and reduced margins particularly in plastics and artificial fibres. When the events of 1958 were repeated in the economic recession of 1961 ICI had started to come to terms with more competitive and international markets, and their own relative competitive position, and began to act.

The first obvious changes were structural, with the objective in some cases to reduce fixed costs per se, in others to introduce more up-to-date technology which could allow structural and manning changes, and on other occasions to release faster-growing business areas from old divisional organisations in order to allow the newer areas greater attention and scope for growth. Thus in 1958 the creation of Heavy Organic Chemicals Ltd meant that Billingham Division lost its Heavy Organic Chemicals interests and one-third of its staff and two works. In 1960 Lime Division was absorbed into Alkali Division, and then in 1961 Alkali also acquired the old Salt Division. In 1963 much bigger business refocussing and cost savings became possible with the announcement that in 1964 Alkali and General Chemicals Divisions would merge and become a single operating unit called Mond Division. In 1961, with ICI continuing to hunt overhead in hard times, the Wilton Council was summarily abolished and the new HOC Division was reluctantly given the task of running the rapidly expanding Wilton manufacturing site. In addition, between 1958 and 1965 the number of weekly staff at Billingham declined substantially as a result of a change in feedstock from coal-coke to oil.

Parallel to and post the above structural changes came a number of changes in strategy which were manifestations of the new ideological concern in ICI with international competitiveness. In a situation of US intrusiveness in European markets, the creation of the EEC, falling chemical prices, reduced margins, and increases in wage and salary costs, ICI began to cohere around four strategic changes which it was hoped would improve their international competitive position. These changes were:

1. Technological – the emphasis in the capital programme changed in 1960 from expenditure designed to increase existing capacity by comparatively low cost modifications to existing plant, to expenditure on the construction of new, larger, more efficient plant. With this change the size of capital authorisation and expenditure increased dramatically from expenditure levels of £32m in 1959, to £67m in 1963, and the peak for the 1960s of £197m in 1966. Much of this capital spending was designed to increase the relative size and importance of organic chemicals in ICI, not just in HOC Division but also in the downstream activites of Plastics and Fibres Divisions.

2.  Labour productivity – stimulated by his return in 1960 to the ICI main board from presiding over Canadian Industries Ltd, ICI's new deputy chairman, P. C. Allen, encouraged a range of studies comparing ICI's labour productivity with their American and German competitors. The concern that eventually developed from these studies focussed the main board's attention on labour productivity, led to the main board approving the 1964 Rutherford Panel recommendations, and hence MUPS and WSA.

3.  Market Focus – in 1960 ICI began the long and in 1984 still incomplete process of moving their sales and capital away from the old markets and manufacturing sites of the UK and the British Empire towards first of all Continental Western Europe, and then belatedly into the United States.

4.  Management culture and organisation – although Sir Paul Chambers encouraged an era of technological expenditure in ICI which eventually led to the cash crisis of 1966, £110m of additional loan stock debt, and the rise of planning as a discipline in the company, his period in office is also associated with an attempt to sharpen the technologically predisposed management culture of ICI with market and financial considerations. This change process was symbolised in 1962 by the organisation studies carried out by the main board organisation committee and the McKinsey consultancy firm, and by the decisions taken with various degrees of earnestness in 1964 to implement product/functional matrix organisations in several of the ICI divisions in place of the old functional organisations.

Throughout the 1960s ICI struggled to implement these four elements of strategic change against the backcloth of a UK economy which was now evidently growing slower than its European and North American counterparts, where inflation rates were higher, and where an industry predisposition for counter-cyclical investment as an ongoing strategy produced periodic feasts and famines when over-capacity led to falling prices, reduced margins, and barely acceptable levels of profitability. Vivian, Gray & Co. (1980) have noted that in the 11 years from 1960 to 1971, years of excellent growth for the chemical industry, ICI managed to increase real pre-tax profits by only 2.5% per annum compound. Perhaps because of continuing pressure on margins and the clear requirement for product to be available in quantity in the feast times, ICI majored on the technological and labour productivity components of their 1960s strategies. They were, of course, drawn more into these strategies by the major problems of building new plant and introducing MUPS/WSA described earlier in this book.

Of the other two strategies, major progress was made in the 1960s in getting into European markets, but little substantial impact was made in North America. In July 1960, ICI had created a European Council to study the desirability of large-scale manufacture within the EEC markets. The construction of physical plant and establishment of selling groups in each individual market, plus the creation of a Europa Division to co-ordinate and facilitate the entry of UK divisions into European markets, all had an impact on the proportion of ICI sales going to Continental Western Europe. The percentage of ICI Group Sales going to Continental Western European customers thus increased from 11% (£66m) in 1963 to 17% (£364m) in 1973.

Although shaken by the economic downturn of 1966, difficulties in utilising new plant, falling profitability, and a cash crisis, ICI was too busy implementing what they already had on board to take on further substantial change at that time. However, by the 1971 recession WSA had been substantially implemented and the troubled new plants were now pouring out product, but unfortunately into difficult economic and market conditions. A slowing down of the growth of world industrial production and trade in 1970 and 1971, a drop in the growth of world chemical production from under 4% in 1971, compared with 5% in 1970, and 8½% per annum in the decade up to 1970, plus a rise in European chemical output of 8% and 5% in 1970 and 1971, led to worldwide excess capacity for many chemical products. In the UK, industrial production increased by only 1% in 1970 and 1971, as compared with the 3% per annum increases of the 1960s. All this meant a very limited expansion of sales volume for ICI in 1970 and 1971, and prices could not be pushed up to cover inflationary costs emanating partially from UK economic conditions. The result was that 1971 was the third year running in which the ICI group was subjected to much higher costs for raw materials, wages, and salaries not matched by proportionate increases in selling prices. The management response to these accumulating environmental pressures was another package of structural and manpower changes.

Early in 1971 declining profitability in ICI's explosives, fibres and dyestuffs business areas and the weak business performance of the Heavy Organic Chemicals and Plastics Divisions produced reorganisation and redundancy. Nobel Division, which had operated the explosive assets of ICI, lost its separate status as a division. Dyestuffs Division combined with parts of Nobel Division to become Organics Division, and Heavy Organic Chemicals Division reluctantly added to their burdens by absorbing fibres intermediates from ICI Fibres Ltd, but were given a glossier identity by being renamed Petrochemicals Division. The near financial disaster in Agricultural Division of 1969 had stimulated a series of plant closures and the shutdown of the anhydrite mine so that their employees dropped from 13,009 to 10,376 between year end 1970 and year end 1972. Not even Plastics Division could ignore these pressures and in 1972 the axeman came and reduced monthly staff by around 20%. 1969 was in fact the peak year for ICI's total UK employees, but the 9% drop which occurred between 1969 and 1973 was not earnestly followed up until the crisis conditions of 1980 produced even more vigorous structural and manpower change.

The other notable element of the early 1970s package of changes was that ICI at last acted on their stated policy of entering the United States by acquiring Atlas Chemical Company in 1971.

As we have seen in Chapter 10 of this book the corporate direction of ICI between 1972 and 1978 was characterised by heavy capital expenditure in strategic business sectors and territories informed by ICI's consensual style of main board decision-making and the influence of powerful planning and policy groups system. These investment decisions left ICF's Petrochemicals, Plastics, and General Chemicals interests in the UK, USA, and Europe substantially over-capitalised for the market conditions prevalent by the late 1970s and early 1980s. The outcome of a long process of developing concern about a mismatch between ICI's business strategy, organisation, and top governance and culture and their business and economic environment, were the revolutionary changes in company ideology, structure, and strategy which finally came with the severe economic and chemicals recession of the early 1980s. Beginning with the substantial cuts in Fibres assets and manpower, and moving through a continuing series of philosophical debates about company objectives, priorities and style, there emerged a package of strategic changes between 1979 and 1983 as revolutionary if not more revolutionary than anything attempted since the last period of substantial awakening in the first years of the 1960s.

By 1979 a new and more integrated business organisation and strategy had emerged for penetrating European markets. Fibres and Organics Divisions lost more assets and people. Assets in the two biggest loss-making divisions, Petrochemicals and Plastics, were closed, and then the two divisions were merged in 1981 under a single, smaller board. By 1982 Mond Division were taking out £40m of fixed costs per annum by reducing the number of levels of management and cutting employees by around 30% in three years. ICI's UK employees fell by 31%, from 89,400 to 61,800 between December 1979 and December 1983 as a result of the above structural changes, and additional changes in the service functions to the various UK division, and cuts in headquarters staff. With the arrival of John Harvey-Jones as Chairman in March 1982, the ideological, top governance, and stylistic changes he and others had been championing for some years became manifest in changes in the role, style, and mode of operation of the main board and the decision to move out of Millbank. Through all this the business strategy changes which are becoming tangible are behaviour designed to reduce the proportion of ICI's total sales emanating form the low-growth heavy chemicals sector, marshalling resources to buy further assets in specialty chemicals with high margins such as pharmaceuticals, agro-chemicals, and chemicals used in electronics, and the continuing talk of a big US acquisition to acquire a dominating role in the specialty end of the US chemical industry.

Having established the theme in ICI's recent corporate development of packages of changes occurring around every decade, with a revolutionary break involving sequential changes in company ideology, structure, and business strategy occurring every 20 years in association with environmental crisis and changes in leadership composition and style, the next task of this chapter is to probe into the processes of emergence and implementation of five strategic changes in ICI's recent history to see if there are any patterns in those processes.

SOME PATTERNS IN PROCESSES OF STRATEGIC CHANGE

Care has been taken throughout this book to emphasise that strategic change processes are best understood as contextually located continuous processes with no clear beginning or end. The previous section of this chapter, focussing as it did on a 25-year period of ICI's development, allowed an analysis to reveal periodic eras of high levels of change activity precipitated by, but not solely explained by, economic and business-related environmental disturbance. Clearly a potential danger of an analysis which might infer too simple a relation between economic and business crisis and organisational change is that the firm may thus end up being seen just “bobbing on the economic waves, as so many corks on the economic bathtub” (Boswell, 1983:15). It should be clear that no such brand of simple economic determinism is intended here. Behind the periodic strategic reorientations in ICI are not just economic and business events, but also processes of managerial perception, choice, and action influenced by and influencing perceptions of the operating environment of the firm, and its structure, culture and systems of power and control. Any adequate framework for examining strategic change must include not only objective changes in economic and business forces, but the role of executive leadership and managerial action in intervening in the existing concepts of corporate strategy in the firm, and using and changing the structures, cultures, and political processes in the firm to draw attention to performance gaps resulting from environmental change, and lead the organisation to sense and create a different pattern of alignment between its internal character, strategy, and structure and its emerging concepts of its operating environment. As was emphasised earlier in this chapter the real problem of strategic change is ultimately one of managerial process and action; of signalling new areas for concern and anchoring those signals in issues for attention and decision, of mobilising energy and enthusiasm in an additive fashion to ensure that new problem areas found and defined eventually gain sufficient legitimacy and power to result in contextually appropriate action.

The role of this section of the chapter is to take a more detailed look at any evident patterns in the processes of managerial action in five cases of strategic change described in earlier chapters. To put a spotlight on the how of creating strategic change without losing sight either of the what and why of change, or of the intra-organisational and environmental contexts through which those processes flowed. Of these five cases one deals with corporate-level strategic change, and the other four involve strategic changes attempted by divisional level managerial action confined to divisional problems, but to varying degrees influenced by some of the corporate preoccupations of the day. All are strategic changes in so far as they largely but by no means exclusively involved the top decision-makers of each organisation wrestling with consequential changes in one or more elements of business strategy, structure, culture, and manpower levels or employment practices.

The case of corporate-level strategic change, over the period 1973–83 will be used both to emphasise how antecedent factors eventually shape the character and content of changes made at the revolutionary point when the changes are delivered – in this case of course the delivery started in 1979 and 1980 – and also to pinpoint key patterns of managerial behaviour which helped to produce such outcomes. The other four cases will then be examined for the presence or otherwise of such patterns of management action, and for the impact of strategic context and process on the content of strategic changes which eventually emerged.

The cases do involve processes of change suggesting different outcomes. The corporate level change of 1972–83 and the Mond changes in top governance, organisation structure and manpower, examined over the period 1973–83 brought clear changes, but changes which are still being implemented. These two cases, therefore, are still very much in process and the effect of those changes, including any regression from them, is a question for future analysts of ICI's corporate development. This point about the analytical importance of the time frame for assessing change processes and outcomes is borne out by a look at two further cases. The change in top structure and culture of Petrochemicals Division over the period 1970–73, and the period of social innovation in Agricultural Division whilst George Bridge was Personnel Director from 1962 to 1967 to varying degrees indicate how strong change leaders can make changes happen, but with their succession, how those change processes and outcomes do not necessarily stick. All of the cases indicate the importance in managerial terms of strong, persistent, and continuing leadership to create strategic change. The Petrochemicals and Agricultural Division cases illustrate the regression and/or changes of direction which can occur when continuity of leadership is broken. The final case, Plastics Division, illustrates the absence of strategic change over the time period under examination, and thus invites analysis of what features of the context and process of management produced a different outcome in that division as compared with the other parts of ICI covered in this book.

The starting point for this analysis of the how of strategic change is the notion that finding and clarifying the content of any strategic change crucially entails managing its context and process. Therefore the focus for the descriptive and prescriptive understanding of managerial action in strategic change entails the interplay between ideas about the context of change, the content of change, and the process of change, together with skill in regulating the relations between the three. The recognition that creating strategic change is in essence a long-term conditioning, educating, and influence process designed to establish the dominating legitimacy of a different pattern of relation between strategic context and content suggests that the theoretical and practical starting point for managerial analysis and action should be the pre-existing pattern between strategic context and content in the firm. The examination of that context will reveal most tangibly and forcefully the sources of continuity existing in any large organisation but also any performance gaps resulting from misfits between the content of existing strategies and management processes and the outer and inner context of the firm, and thus areas of apparent or realisable tension which can be developed and magnified in order to stimulate energy and enthusiasm for change. The beginnings of any descriptive process analysis of change must therefore reside in an analysis of context and continuity. Context and continuity shape the starting point in which change processes emerge, falter, and proceed.

Strategic context is being treated here in two senses. Firstly, outer context refers to the economic, political, and business environment of the firm and the way changes in those factors help shape the market and competitive position of the firm relative to others operating in similar markets or industries. And secondly, inner context refers to the business stategy, structure, cultural, and political context which help shape the management processes through which ideas for strategic change proceed. The previous section of this chapter which connected outer context factors such as gross changes in business and economic environment to ICI's changing competitive position and hence to revolutionary patterns of organisational change will have reminded us that context is being treated here not just as a source of constraint but also a source of opportunity for managerial action in the change sphere. Indeed as we shall shortly indicate, a crucial part of managerial action in creating strategic change rests not only on the skill in mobilising changes in business and economic trends to achieve desired practical effects, but also actions taken to amplify or use pre-existing changes in the structural, cultural, and political context of firm – or even direct attempts to change those features of inner context by leaders of strategic change ideas, in order to help provide the conditions and processes to legitimate the content of strategic changes.

But although it is recognised that natural changes in context and deliberate interventions to change context can be built upon to encourage change processes, it is also evident from these five cases that variability in the contextual starting point for change, and indeed differential difficulty in changing the context through managerial action whilst the change process evolved, materially affected the capacities of managerial action to influence and create the desired strategic change. But why are some organisational contexts more receptive and others more inhibiting of strategic change? Partly it seems from these cases from the absence of certain factors. In the first place the absence of sufficient business and economic pressure, and in consequence the lack of sufficient negative energy for change that comes from dissatisfaction with the status quo. And secondly the absence of the positive energy and tension for change which can be created by the vitality, imagination, visionary ideas, and persistence of a leader championing a particular strategic change, or even the necessity for increasing the organisation's overall capacity for continuous change.

But these cases indicate that variability in context is not just a question of the absence of environmental disturbance and leadership skill in orchestrating a new marriage between strategic context and content. Strategic change is also a question of the way management processes in integrative and segmentalist organisational structures and cultures are in turn broadly facilitative of, and inhibitative of, the processes of vision-building, problem-identifying and acknowledging, information-sharing, attention-directing, problem-solving, and commitment-building which seem to be necessary to create change. Kanter (1983) has recently argued that the endemic problem-solving processes she found in integrative structures and cultures were broadly supportive of change processes whilst segmentalist structures and cultures were generally inadequate contexts for certain kinds of change processes to materialise.

As she admits Kanter's (1983:396) useful distinction between integrative and segmentalist structures and cultures and the managerial problem-solving processes associated with those structures and cultures, is a development of the now familiar dichotomy of organic and mechanistic organisations propounded in Burns and Stalker (1961). Integrative structures and cultures, Kanter argues, provide three of the enabling conditions for innovation: a diffuse climate of encouragement for change and thus the motive or desire for change; managerial processes which aid power circulation and power access and thus empowerment for change; and a variety of integrative mechanisms and team-building devices which encourage the fluidity of boundaries vertically and horizontally in the organisation which allow both the circulation of new ideas and participative arenas for those ideas to be shaped, supported and carried through to action plans.

Segmentalism, on the other hand, encourages a style of thinking and problem-solving which is anti-change, and thus the motivation to solve problems declines in segmented systems. Segmented cultures and structures are finely divided by levels and functions, so that one-on-one relationships prevail, clear status and power gaps compartmentalise ideas and problems, and information is a secret rather than a circulating commodity. This leads to a situation where innovation and change are difficult to handle. “Change threatens to disturb the neat array of segments . . . as soon as a problem is identified, it is surrounded and isolated . . . those operating segmentally are letting the past – the existing structure – dominate the future” (Kanter, 1983:29).

Having stretched her data into these two polar categories, Kanter is careful to argue both that segmentalism as a style of organising is appropriate for activities of high certainty where routine, habitual action is efficient and desirable, and that segmentalist tendencies may protect the successful organisation against unnecessary change, ensuring that it will repeat what it already “knows” (Kanter, 1983:31). Kanter also argues that where change did occur in segmentalist systems the evident pattern was for it to come from either mandates from the top, formal tests or change projects and experiments initiated at the top, by bringing in outsiders who could operate with greater degrees of freedom than people inside the system, or as a result of “holes in the system”, unplanned change opportunities.

Without taking on board all of Kanter's explicit value biases towards entrepreneurial spirit and co-operative modes of problem-solving as prerequisites for change processes she prefers, there are some similarities between her broad findings and the conduct of strategic change in these five cases in ICI. Indeed critical to all the cases where change occurred was the necessity for managerial action to change predominantly segmentalist structures and cultures in ICI towards her integrative ideal, to encourage the rather different processes of managerial problem-solving which were necessary to champion novel and substantial ideas for change through the system. In Plastics Division, on the other hand, where changes in the operating environment and competitive position of the division from 1967 onwards might have warranted strategic change, the particular brand of segmentalism that had stabilised there meant the division was poorly equipped from a context and managerial process point of view to change itself. In Plastics Division the combination of a tradition of effortless growth and secure if unspectacular business success, a division structurally little disturbed by corporate realignments, run from the top by a stable management group, there developed a segmentalist structure and culture which restricted awareness and perception of environmental change and inhibited the development of integrative management problem-solving processes which might have seen and taken opportunities for strategic change.

So if both characteristics of the outer context and features of the inner context of the firm can shape the starting point for continuity and change, how does change actually occur – through what sort of process?

These five ICI cases certainly corroborate Quinn's (1982) findings that they do not occur according to the rational–analytical schemes touted in the planning literature. There is little evidence in the ICI data of change occurring as a result of a rational linear process of calculatedly forming a strategy and then sequentially proceeding to implement it through controlled and programmatic planning. Forming and implementing strategic changes is not a steady, undisturbed progression from one routine to another, but rather a slow and incomplete process of breaking down old marriages between strategic context and content, and in an additive, intuitive, and occasionally opportunistic fashion building up a climate of acceptance for change.

In Chapter 10 a simple four-stage model was used to suggest key parts of this process: phases of developing concern with the status quo, then getting acknowledgement and understanding of the problems that needed tackling and why, a planning and acting phase, and then a period of stabilisation. These phases, of course, do not occur over similar time periods, neither do they necessarily follow the sequence indicated. Concerns raised and problems acknowledged get blocked, the context changes, new concerns appear and the process accelerates through to action, using solutions made available by previous debates.

If there is no mechanical pattern of phases in these ICI cases of change one pattern that is evident is the role of leadership in initiating strategic change. George Bridge in Agricultural Division, John Harvey-Jones in the Petrochemicals Division structure change and the corporate change process of the 1970s and early 1980s, Tony Woodburn in Mond Division, all started change processes by sensing, and at first imprecisely articulating, concerns about mismatches or performance gaps between aspects of their organisation and what they saw as a changing environment. In this process of leadership, as Schon (1983) reminds us finding, drawing attention to, and helping to define a problem a critical mass will accept as important, is as important as solving the problem found. But this important early activity of problem-finding, of developing concern about the continuance of the status quo, was also linked to another leadership activity designed to raise the level of tension in the organisation – the presentation of usually an imprecise vision of where the organisation ought to be moving towards in the future.

The change process was also influenced in four of the cases by attempts made to alter the structural and cultural context in which strategy changes were being articulated. These context changes included using new ideological posturing to challenge traditional ways of thinking and acting, setting up management development programmes such as the Management of Change Workshops to focus attention on the need for new management capabilities and skills, and creating permanent and temporary changes in administrative mechanisms and working groups to build energy and commitment around particular problems and their solution. As I have already said the above activities were rarely part of some grand process design. Instead opportunities were taken as they presented themselves to break any emerging global vision of a better future into manageable bits; of finding small steps on the way to larger breaks; of using any political momentum created by a number of complementary moves to bind a critical mass of powerful people around a set of principles which eventually would allow a series of pieces in the jigsaw to be moved simultaneously.

The above processes required understanding and skill in intervening in the organisation's structure, culture, and political processes. As Selznick (1957:70) has argued, “a wise leader faces up to the character of his organisation, although he may do so only as a prelude to designing a strategy that will alter it”. This kind of process management also necessitated patience and perseverance; waiting for people to retire to exploit any policy vacuum so created; introducing known sympathisers as replacements for known sceptics or opponents; using succession occasions to combine portfolios and responsibilities and integrate thought and action in an otherwise previously factious and deadlocked area of change; backing off and waiting, or moving the pressure point for change into another area when continuing downright opposition might have endangered the success of the whole change exercise.

Having broadly established some of the features of outer context, and integrative or segmentalist organisational contexts which may inhibit or facilitate change, and then indicated what kinds of activities in managing processes of change may create strategic reorientations, I wish now to move on and illustrate how those features of strategic context and process influenced the particular content areas of change in the five cases.

The five cases of strategic change

Of the five cases of strategic change reported in this book, the corporate change process described in Chapter 10 and the Mond change process outlined in Chapter 9 provide the fullest treatment of how the interactive effects of a changing context and management thinking and action led to strategic change. There are clear similarities in the starting context and management processes in these two cases. Of course regarding strategic decision-making and change as continuous processes means that breaking into the process to note a beginning is something of an arbitrary act, but since in both cases new leadership in change process terms was initiated when John Harvey-Jones became a member of the main board in 1973, and when Tony Woodburn became chairman of Mond in 1973, that year is a sensible empirical point to cut into both processes.

Both Harvey-Jones and Woodburn began their search for change in management structures and cultures with many segmentalist features. The ICI main board at that time featured a succession of short-tenure, non-chief executive Chairmen, a two-tier board with a top box of the Chairmen and his three deputies, and a series of executive directors who were compartmentalised by portfolios allocated by product, territory, and function. The board was being driven by the twin obsessions with cash management and capital expenditure, and little time was being devoted to the potentially unifying activity of developing thought about the overall size and shape of the ICI group in which individual capital expenditure decisions were being made. In the smoothing-consensus style of decision-making in and around the main board, there was much evidence of games-playing between the board, the policy group directors, and the operating units over the annual capital expenditure allocation process. The main board were surrounded by the compartmentalised functional structure, and intellectual culture of Millbank where the central taboo was “don’t rock the boat, don't dig too deep, too fast. This boat has stood the test of time.”

The Mond top organisation and management culture in 1973 was equally segmentalist, in fact the Mond board at that time was a board in name only. The powerhouse of the division was the executive committee of the chairman and his three deputies. The directors were a loose chorale of individuals who responded to the top four in an atmosphere of formality and hierarchy. The tendency of the executive committee to relate to the directors individually through monitoring and controlling activities, forced those directors and the levels below them back into their product groups and functions. The level below the board felt distant from individual directors, and considered the deputy chairmen and the chairmen were up in the stratosphere. These features of segmentalism at Mond meant there was an absence of unified thinking at the level of the business as a whole as evident as that on the main board.

Finding fellow-travellers to rock the boat in structures and cultures as clearly segmentalist as those in Mond and on the main board was clearly not going to be an easy task. The task was made that much more difficult because in 1973 both ICI as a group and Mond in particular were just about to enter a period of what with hindsight turned out to be a more limited period of business success than was apparent at the time. Not only was there no readily apparent performance gap to build on to help justify change but had a gap in principle been there to exploit, it is doubtful if the pattern of management process in either situation could have adequately sensed the problem and put together a unifying and actionable solution to meet the challenge. The intuitive understanding by Woodburn and Harvey-Jones of the inadequacies of the management problem solving processes around them, plus for Harvey-Jones the stark failure of the 1972 and 1973 board organisation committee, for what he and others attributed to process planning and political reasons, meant that if they were to make the impact they felt appropriate in business and environmental strategic change then one of their starting points for change had to be the management processes they were part of. But where and how were they to start, because business-environmental change of a substantial kind could not be justified by the business performance of the day, and changing the structures and cultures which were nourishing the prevailing management process was not yet legitimate as an area of board discussion, never mind a lever to be pulled to create strategic change which would have a demonstrable impact on business performance.

As I have already indicated, the process of change that developed from those contexts, and in various ways required action to move those contexts from segmentalist towards a more integrative set of characteristics, is best thought of as a long-term conditioning, educating, and influence process of marrying an emerging view of the content of strategic change with changing perceptions of the context of change. A process which may, as Pettigrew (1973) and Narayanan and Fahey (1982) have argued have a phase where demands for change emerge (gestation processes in Narayanan and Fahey's terms) involving vision-building, issue-sponsoring, problem-identifying, and attention-directing, all of which attempt both to raise the development of concern that things are not as they should be, and also eventually lead to some acknowledgement and understanding of issues that can be labelled as problems worthy of legitimate concern. These initial phases of education and influence are of course highly interdependent with the activities of resolving dilemmas and problems now on the front stage of decision-making; of breaking global problems and imprecisely articulated visions into manageable and therefore politically actionable bits; of using deviants and heretics to think the unthinkable, and say the unsayable; of mobilising a changing outer and inner context to question traditional ideologies; of using novel permanent and temporary administrative and managerial mechanisms to expose information and problems previously compartmentalised by traditional structural and political arrangements, and then build on this more integrative exposure of ideas and people to create the political will, the necessary commitment to solutions which may have been around a good deal longer than the problems they can now be legitimately connected to.

The gestation process of strategic change in Mond and on the main board are both associated with the sensing and articulation of vague discontents and imprecise global visions of individuals who adopted leadership positions for change. Both were initially hamstrung by the lack of felt need for change by their colleagues, by the highly segmented management process around them, and by in Woodburn's case perhaps rather more than Harvey-Jones, the counter-reactions and implicit control tactics of their colleagues. The fact that Woodburn's initial approach appeared to be potential-driven and not problem-driven, improving the potential of the Mond board rather than solving a particular problem, was too uncomfortable and imprecise for a set of people rewarded up to then in their career for instrumental and mechanical problem-solving behaviour. When this potential-driven rationale for change was linked in the minds of part of the board with “love-ins” and “sandals and beads OD” further uncertainty ensued. Faced with this uncertainty about the outcomes of such interventions, comfort was restored for some by labelling and stereotyping Woodburn as a “left winger”, and as “all for participation”, in a management–union context characterised by open disputes which hardly seemed compatible with Woodburn's ideals.

Harvey-Jones’s learning from the process failures of the 1972–73 board organisation committee, and from the difficulties George Bridge had stimulated by championing T-groups, meant he was stylistically more cautious in change initiation, more careful in his own words never to let others lose sight of his “operator” capabilities. Nevertheless if stylistic differences are discernible between Woodburn and Harvey-Jones, the common feature of their approach was the recognition they were both initiating long-term processes, using both change methods and change objectives which had themselves to be legitimated as part of this process of change. Harvey-Jones’s approach was to try and get some major changes in the role, size, and style of operation of the main board as a vehicle to improve the company's ways of managing strategic change, and to move from the existing situation where in his view ICI waited for some bit of the company to be evidently hurting and then move in on that bit to:

(a) try and read the environment about 5 years ahead, and

(b) try and aim our objectives 5 years ahead and only then to start intervening organisationally.

In the meantime he said “you have to make some interventions . . . but you have to make sure that these changes will be reinforcing to the big changes you are trying to aim for . . . so the main initiative has been and still is to try and make the board change.”

Harvey-Jones’s early activities were designed to improve the flow of disconfirming information to the main board about its and the ICI group's role and processes, by setting up study teams, using internal and external consultants, and sponsoring people into departments such as management services where they could have indirect effects on people's perspectives about problems. It would have been very much more difficult for him to be associated with such activities, and indeed to legitimate concern about organisation and management issues had he not had the legitimacy to roam all over the place that came from his functional responsibilities as organisation and services director. This requirement to use the existing structure to change the existing structure and processes should not go unnoticed.

Both Woodburn and Harvey-Jones made use of OD consultants. Being chairman, and after ensuring sufficient support of his deputies, Woodburn was able to directly employ Bainton and Wilson, the two American consultants, to use open-systems planning and team-building techniques with his board. Harvey-Jones had neither the positional power nor informal political position on the main board in 1973 to attempt such direct methods. The plan he and Dudley concocted after the board organisation committee failure was to wait for the outgoing Chairman's retirement and in the meantime to raise their diagnosis of company problems individual by individual in the hope of presenting a unifying position paper to the Chairman-elect before he took office. The secretarial error which fortuitously but prematurely released Dudley's paper “ICI in 1974” simultaneously to all the main board further speeded up the process of releasing disconfirming information, and nicely illustrates the role of chance and opportunism, alongside foresight and intent, in change processes.

The furore created by the above incident did nothing for Dudley's credibility in the short run, but it did allow Mercer the external OD consultant access for the first time to an ICI Chairman, and continuing but intermittent impact on the processes of top-level change right through until the 1980s. The above process was built upon by further activities designed to open up debate at the top of ICI. The new Chairman in 1975 was persuaded to break tradition and take the main board away for a 2-day meeting to discuss the structure and operation of the Group. This led to the setting up of three board task forces to consider different aspects of strategic change in the group, and an agreed process of reporting back to their colleagues.

Further common features of the Mond and corporate change processes of the 1970s was that those pushing for change in both situations were able to build and capitalise on the stirrings of other groups for change and access to decision-making processes, use environmental disturbances which temporarily caught management attention, and help create integrating mechanisms to manufacture consent for bits of the emerging change problem to be picked out and implemented. Thus in Mond the IR problems of the mid-1970s forced not only eventually a change in strategy for dealing with the unions, but also first a unifying of perspective amongst the previously divided cruiser captain works managers, then a problem which forced dialogue between the works managers as a group and the board as a group, and eventually at least a start in terms of developing a set of unifying principles to manage the division through the IR and business operating principles and the Mond Charter. The IR fires also triggered Sandy Marshall's move from being a works manager to becoming the division's senior internal development resource, and he was to play a significant role after that both as a linking mechanism between the board and levels below the board, but also a trainer helping to improve the change management capabilities of middle and senior managers in the division.

The upward pressure coming to the main board was of course from the division chairmen. The board development resource group sanctioned by Sir Rowland Wright encouraged process help to be made available to the, at that time, organisationally illicit division chairmen's meeting, and to a company Chairman who was breaking some of the traditions of the main board's mode of operation, and first got the Division Chairman's meeting legitimated and regulated, and then in 1977 created the crucial integrating administrative mechanism of the (Company) Chairman's Group Conference. Beyond the stage now of developing concern for change, this annual Chairman's Group Conference meeting became a crucial structural mechanism for the main board, chief executives of overseas subsidiaries, chairmen of the UK divisions, and the UK general managers to jointly share information and get common acknowledgement and understanding of problems and priorities. At the stage of planning and acting to create strategic change in the late 1970s the Chairman's Group Conference was also an important mechanism for the main board to test, refine, and legitimate action; and thus a key political mechanism to unify ideological change, and bring back bits of the change problem which were ready for action to ensure the commitment of key segments of the Company.

The length of time it took in both situations to move beyond the phase of philosophical debate, of developing concern that all was not well and acknowledging and understanding some of the problems that eventually caught a critical mass of management attention, towards the phase of concrete planning and action for change illustrates the difficulty of shifting an organisation the size of ICI. Stacked up against the imprecise vision of a better way of directing ICI, and what appeared to be unjustified and vague first-action steps, were the massive forces of inertia in the ICI structures, systems, and political processes. These forces of inertia were broken in Mond and on the ICI main board by a number of interrelated factors.

The continuity and persistence of change advocacy in both situations was critical. The problems couldn't go away, even if they couldn't be resolved, for as long as there was some continuity of change advocacy to wait it out, wear opponents down, appeal to new ideas and changing contexts, create teams to invite sceptics in, and orchestrate any signs of progress.

The change of personalities and style on boards can critically affect the balance of power for and against new ideas and particular changes. The arrival of more internationally commercially minded men onto the main board of ICI towards the latter end of the 1970s changed the balance of ideological preoccupation from technology towards ideas about international market competitiveness. Even if those individuals didn't necessarily line up immediately behind the changes in structure and style being advocated by Harvey-Jones, their ideas helped further discredit and muddy the waters of the dominant ideology of the day – the preoccupation with cash management and capital expenditure. In Mond the change over from Woodburn to Bay as chairman, and the appointment of Nicholas Mann as Division Personnel Director with the continuing presence in the “for change group” of Dylan Jones, all helped to make the development stream there more task-oriented and focussed.

However, the momentum for change in Mond and in the main board accelerated when by 1978 it was more apparent to senior managers in parts of ICI other than Fibres Division that a punishing change in the business and economic environment was more of a reality than a prospect. Only then did ICI become sufficiently dissatisfied with its performance to act. The global problem being discussed started to appear and be discussed as pieces of the jigsaw under pressure. Tackling the problem of European business organisation through task groups containing executive directors and division chairmen brought the realisation amongst the subset of people involved that “we were over-fragmented, we didn't really use our total competitive strength”. Harvey-Jones and Woodburn then seized their opportunity to pick up another piece of the jigsaw, putting some of the UK heavy chemicals divisions together. Again a slow, additive use of integrating mechanisms such as the Petrochemicals Product Directors Advisory Group, the Inter-Divisional Policy Group, the Heavy Chemicals Policy Group, and at the point of action the Heavy Chemicals Executive, all helped to build commitment and legitimacy for change across divisions, between executive directors and divisions, and ultimately on the main board. Without detracting from the display of managerial skill in Mond, perhaps an inevitable difference between the action phases of the Mond changes and the corporate changes of 1980–83 was that the more limited scale of the management task in the divisional case made it easier to articulate an overall guiding set of principles – the Mond Management Model, to help justify and detail the particular changes made. The sheer size of the corporate problems being tackled at that time, the necessity on logistical and political grounds to divide the problem into manageable bits so that change was proceeding in amongst at least some relative areas of stability, and as personnel moves released politically deadlocked areas, meant there was no overarching and modestly detailed framework guiding the corporate changes. The fact that the framework, and in some cases the detailed systems and structures, were being invented after the announcement of changes had been made, will significantly affect the implementation and stabilisation of those changes into the mid-1980s and beyond. It was this realisation that led one of the OD consultants involved in the corporate change processes to query how much had been learnt by senior people in ICI over the previous ten years:

I think in circumstances which are not panic circumstances we have marginally improved our ability to relax, and think more effectively about problems. But in panic situations, about panic situations, we've probably learnt nothing.

So in spite of the anticipatory and enabling processes which occurred at the corporate level and in Mond Division between 1973 and 1979, enabling processes which produced a degree of ideological change, alterations in structure and context towards more integrative management processes, and indeed some additive changes in the content of strategic change, it took dramatic change in business context to unify management action around now starkly clear change objectives.

The Mond and corporate change processes both illustrate well the development of concern, acknowledgement and understanding, and planning and action phases of strategic change processes but cannot at this juncture reveal much about the stabilisation of change, although the comments just made about the presence in Mond of a coherent framework or philosophy for change in the form of the Mond management model, and the absence of an equivalent framework in the corporate change, suggests a more comprehensive and effective stabilisation process in Mond than in the ICI corporate sphere. The next two change processes – the attempt to change the management culture of Agricultural Division between 1962 and 1967, and the attempt to change the top structure and management culture of Heavy Organic Chamicals/Petrochemicals Division between 1970 and 1973 – again show the fragmented, evolutionary, opportunistic, and political character of top-level change processes, but also illustrate well the difficulties of trying to create changes in top management culture in the short run, and the kinds of regression that can occur in strategic change when there is little thought and action devoted to stabilising change processes.

In Chapter 5 a detailed description was offered of George Bridge's attempt to change the overall management culture of Agricultural Division in amongst the major technological revolution going on in the 1960s and the broader social innovation implied in attempts to implement MUPS. Likewise Chapter 7 provided a comprehensive account of the attempts made by John Harvey-Jones to use the vehicle of a divisional organisation development unit around a more limited objective of changing the top structure of Petrochemicals Division from a purely functional to a matrix form, and also in a less focussed way to impact on the less explicit and tangible objective of influencing a predominantly hierarchical and authoritarian management culture in the direction of “relaxing its attitudes and behavioural processes”. No attempt can be made here to repeat those narrative accounts; rather the focus will be on drawing out some of the broad similarities and differences between the Agricultural and Petrochemicals (PCD) change processes, and between those two processes and the Mond and corporate change processes already discussed.

One similarity between the Agricultural and PCD change processes is that both occurred after, and were precipitated at least partially by, disturbances in the outer context of the two divisions. Billingham Division (the pre-1963 name for Agricultural Division) found itself in 1959 in a loss-making situation poorly placed to compete in its traditional markets. It had an out-moded technology and was being priced out of international markets by the high feedstock costs of its coal-coke fed processes of manufacturing ammonia for fertiliser. With 17,000 employees it was overmanned, and its functional structure was inappropriate for handling technical and market change. Its board and set of senior managers had been in post for many years, were interpreting their role in a hierarchical and formal manner, and there was evidence of increasing industrial relations problems. The sense of crisis which developed around these interrelated business and organisational elements led firstly to managerial action to change the technology. In fact the technological change which replaced coal-coke as the feedstock with oil which occurred between 1959 and 1964, was quickly followed between 1965 and 1970 by the construction of large new single-stream ammonia plants, and then a further change in feedstock from oil to natural gas. These changes meant plant closures and significant manpower reductions.

On the organisation structure front, Billingham Division had lost all of its Organic Cehmicals assets to the newly created HOC Ltd in 1958, had been required to change its name to Agricultural Division in 1963, and had also been stimulated by corporate pressure to move from a functional to a matrix structure in 1963. Millbank interest in the effectiveness or otherwise of the management of Agricultural Division also led to a new chairman, and four new directors of Agricultural Division being appointed from outside the division's existing management group around the period 1962–63. One of those five new board members was the new Personnel Director, George Bridge.

The above pattern of change in outer and inner context was also evident prior to the PCD structural changes of 1972, although to nowhere near the same extent. The HOC board had been galvanised into action by the main board's interest in implementing MUPS/WSA on the conflict-ridden Wilton site, by their own very poor business results during 1970 and 1971, by the realignment of divisional boundaries which affected them in 1971, and by John Harvey-Jones’s appointment as division chairman in July 1970.

If the context of both divisions had been destabilised by the above events, another force for change was the visionary leadership provided by George Bridge and John Harvey-Jones. Bridge entered Billingham in 1962 with a Millbank reputation “as the most revolutionary, impossible person” and promptly tried to live up to that reputation by trying to dent and break up the hierarchy at Billingham. Bridge's diagnosis of what was wrong with the Billingham management culture (described on page 143) was a good deal more explicit than his vision of what he hoped to replace it with. Bridge's search for a more clearly articulated way of connecting his concerns at Billingham to a legitimising framework which would help pinpoint the content of desired changes took him to the United States. There in amongst a host of behavioural scientists he found the mechanism of change he thought appropriate – the behavioural sciences, and a particular behavioural scientist, Douglas McGregor, who provided him with a language and a philosophy to help structure his problem of culture change.

Having clarified his problem, moving Billingham from a directive theory X culture to a participative theory Y culture, in a faltering, untidy, opportunistic but persistent fashion he introduced Billingham to the behavioural sciences. Directors and senior managers went off on T-groups, prominent American behavioural scientists were invited into Billingham to give lectures, conduct field experiments, and run novel training programmes, and with Douglas McGregor’s death, Ron Mercer began to work with the Agricultural Board as a consultant.

Bridge also tried to facilitate the above process by changing the structural and policy context within which personnel work was carried out in the division. He developed a more interactive process for generating personnel policy in the division, and decentralised personnel work from staff and labour departments in the divisional headquarters, down into the individual works and departments. By creating new personnel officers who he hoped would interpret their role in a more proactive problem-solving rather than reactive fashion, he hoped to start change processes at the middle of the organisation, works by works, and department by department.

Of course whilst Bridge and his right-hand man Tom Evans were making the above interventions into the Billingham management system, Bridge was also a leading figure in orchestrating the development of the company change programme MUPS. The launching of MUPS in 1965 was used by Bridge and Evans to continue the pressure for change at Billingham, and for a time the Bridge–Evans realisation that success of MUPS was predicated on the need to change managerial attitudes and behaviour as much, if not more than, those of the work force, meant there was a wider and more compelling contextual reason for pushing for a change in the Billingham management culture than the one he had started with in 1962.

Bridge and Evans continued the additive pressure for change in Agricultural Division right up until they left in 1967 and 1968. Various complementary activities were allowed to start at different levels in the structure. The onset of a new system for management and supervisory training, the Sandsend community joint management and union events, the activities of the Teesside Industrial Mission, a newly developed system for shop steward training, the workshop activities for managers on group process skills, and the early joint union-management workshops in Products Works all helped to seed developmental ideas into the division, draw out early adopter managers who were predisposed to alter the old ways of doing things, and break some of the old barriers in the management and union system about contact between management and employee representatives outside more formal industrial relations procedures.

Even though Bridge and Evans tried to broaden the width of their bow wave for change through the above seeding and climate-building activities, and undoubtedly some of the seeds did germinate after they had gone, in Bridge's absence from 1968 onwards there was never the same board level energy or pressure for a social innovation to complement the technical one that business pressures made an imperative. Bridge's forcing and pushing style made things happen but pushed resistance underground. With Bridge gone his methods and imprecise objectives could be openly criticised and his successor as personnel director was not allowed the same degrees of freedom by the Agricultural Division board. A new division chairman in 1968 meant the exit of Ron Mercer as a board consultant, and only the appearance of Noel Ripley with a more bottom-up rather than top-down change strategy helped support some of the change activities Bridge had started, and begin to germinate others. Any continuity and stabilisation of change process possible in Agricultural Division was left to Noel Ripley and his voluntary association –The Swallow Group, described in Chapter 6.

A similar process of a powerful change leader, searching for the appropriate change content in a destabilised business and organisational context, finding at the second attempt that changing structure was an acceptable change area, but this time failing to institutionalise an on-going change process, was also evident in Petrochemicals Division between 1970 and 1973. In PCD John Harvey-Jones was able to create a change from functional to matrix structure, one of his change objectives in his 1970 paper on “long-term organisational aims”, but was not able either to change the management culture at PCD in the direction he felt appropriate, or to institutionalise the PCD Organisation Development Unit (the ODU) as a vehicle to bring continuity of change process in the division. Within 6 months of Harvey-Jones’s departure to the main board, the ODU had been wound up, all talk of cultural or management style change had virtually evaporated in the top echelons of the division, and the PCD board returned to their 1960s preoccupation with the acquisition of, with hindsight, what turned out to be some highly questionable capital assets. As a participant in the PCD management culture of the time so crisply put it:

They [the PCD managers] weren't in the business of innovation . . . Their notion was minimum disturbance and maximum production. That was heavily ingrained and where you were having fun on new investment that was a deeply technical matter . . . straight down the line was the PCD culture. After WSA and SDP, they simply blew off the froth – organisation development – and got on with the straight drinking.

The problem in PCD then was not just outside the structural area to stabilise a change started by John Harvey-Jones by, for example, developing successors who would have perpetuated tension in the system for change in culture and management process, but also there was evidently so little ideological change under even Harvey-Jones’s leadership. Given Harvey-Jones’s short tenure in office as division chairman, his desire to force change through quickly in an area of cultural acceptability (organisation structure) little effort was devoted to legitimating ideological change as a content area of strategic change, never mind unifying the PCD power system to acknowledge that ideological change could impact on business focus and performance, and then get them to act appropriately in that sphere. No such ideological change occurred in PCD, of course, until after the business traumas of 1980 and 1981, and until the main board implemented the merger of Petrochemicals and Plastics Division in April 1981.

Plastics division, 1967–79

Chapter 8 amply described the series of attempts made by Simon Dow and the small group of change-minded internal OD resources, sometimes with the not too persistent help of a few line managers and the occasional director, to change the management culture and core management processes of Plastics Division to help deal with the changing business, economic and political environment which faced ICI's Plastics interests from about 1967 onwards. The failure of those attempts is clear enough for apart from a period in 1972 when “the axeman cometh”, no substantial changes in business strategy, organisation structure, management culture or management systems and processes occurred until the business traumas of late 1979 left the then Plastics board and indeed the main board of ICI no choice but to impose revolutionary strategic change on ICI's Plastics businesses. The pertinent question to ask is why did Plastics Division not appear to have the capacities and capabilities to change itself?

The answer to that question, as was hinted earlier in this chapter, has to do with a mixture of features of context and management which were present to varying degrees over different time periods in the four other cases of strategic change, but were absent in the Plastics Division situation. The missing factors in Plastics were the absence of the kind of business–environmental disturbances which attracted main board and divisional board attention and action in Agricultural Division and HOC/PCD Divisions; the absence of the kind of top-level visible championing of structural, cultural, and business change that was evident in the activities of John Harvey-Jones, Tony Woodburn and his successors at Mond, and George Bridge. However, what was present in Plastics Division to a degree arguably in excess of anything seen in PCD and Mond was a stable segmentalist management structure and culture which in the absence of gross business disturbance and a visionary interested in revolutionary change, proved to be a setting quite impervious to strategic change.

The reader will recall from Chapter 8 some of the features of Plastics Division's history and development which distinguished it in terms of the extent and the stability of its segmentalist management structure and culture. In the heady days of growth for the plastics industry in the 1950s and early 1960s, Plastics Division had settled for a divisional ideology of “growth forever, profits forever”, although the profits were never that spectacular even in the years at the top of the 4.5-year business cycle. The division was run by the same small group of ex-Alkali Division people who had joined Plastics when the division was created just after the Second World War. By the end of the 1960s the Plastics board had the highest average age in the company, and it was not until the death of their chairman in 1972 that Millbank was able to bring in as chairman a man who had not been socialised amongst the research chemists who had traditionally dominated the Plastics management culture.

The stability of growth in sales volume, and continuing if unspectacular profits, the stability of senior management personnel, after polypropylene (in 1962–65), the remarkable lack of change in the division's products and technical processes, and the way Plastics was not affected by any of ICI's occasional redrawing of business areas and boundaries, all added up to a remarkably constant environment in which developed a highly segmented management structure and culture.

The change in 1964 from a functional to a matrix organisation form encouraged the development of a more market and product focus in the division to counteract the power of the functions, and in particular the research and technical areas but in the absence of a team concept of board working, the division was fragmented from a management point of view in virtually every dimension possible. There was a clear distancing between the chairman and his three deputies (the top box) and the rest of the directors. Until a new chairman arrived in 1973 the Plastics Division board did not even have a formally instituted set of monthly board meetings and executive committees. If there was little evidence of integrative thinking and planning on the board, there was plenty of evidence of what directors described as fragmentation; of role-bound behaviour, and directors being in watertight categories. The hierarchical distancing between the “top box” and the directors and the fractionation between the directors was carried on down the line. Managers below the board talked of the board being “a difficult culture to penetrate”, “a lot of things are played very close to the chest”. “They’re a bit closed – I personally see it as a weakness because they haven't resolved their own internal differences.” Again this lack of integrative thinking and action at the top, exacerbated any natural tendencies in a matrix for functions and products to divide. The 1972 management redundancies, rather than opening up the above management culture, seemed to freeze it rather than relax it. A consequence was that many of the core business issues of the 1970s, the heightening international competition, the sensing and responding to falling real growth rates for bulk plastics, what to do with maturing products, and how and when to develop new specialty products, were not faced up to. Instead, as one director put it, the board remained “10 individuals doing their own thing”. A board spending too much time “feeding data to the centre [Millbank] and reacting to situations”. Or as another director described the essentially defensive rather than change minded and initiating attitude of the board he was part of:

We are details men – so we'll never be caught out by Millbank.

The new directors brought onto the Plastics board from 1972 onwards either did not appear to see the need for strategic change, or could not see where support could be generated for the first practical steps forward, or if they came with a predisposition and with experience in using behavioural science or OD methods were explicitly dissuaded from using such ideas and methods by some of their more senior colleagues.

In the face of such a well-established, stable, and segmentalist management culture, and in the absence of top-down and powerful change leadership to change itself, one saw a succession of plainly impotent attempts at culture change led by Dow and his associates. Only with business crisis came business strategy, structural, and cultural change, and regrettably only at that point did the senior managers of the division start to fundamentally appreciate the necessity of some level of capability in the division for managing organisational and business change.

MANAGERIAL TASKS IN CREATING STRATEGIC CHANGE

A comprehensive managerial strategy of change requires a more thorough understanding of change in organisations, not a theory of how to introduce any arbitrary change, but a theory of how to direct somewhat the conventional ways in which an organisation responds to its environment, experiences, and anticipations. (March, 1981:575).

In the above quotation, and in a subsequent paper on change and reorganisation in government, March and Olsen (1983) make the essentially simple and elegant point that any practical theory of change has to be based on contextually based knowledge and action about the factors and processes which create and sustain continuity as well as change. March and Olsen come to this conclusion on the basis of their empirical observation that while incremental and less visible changes in government not linked to a major reorganisation often succeed, comprehensive reorganisation tends to consolidate opposition and thus fail. In this view, leadership in change management requires skill in timing small interventions so that the force of natural organisational processes amplifies those interventions. This recognition that major reforms seem to require commitment, patience, perseverance, and repetition fits well with part of the descriptive findings of this study on creating strategic changes. Since business strategies are likely to be rooted both in the idea systems which are institutionalised in an industry sector at any point in time, and are represented in the values, structures and systems of powerful groups who control the firms in any sector, changing business strategies has to involve a process of ideological and political change which eventually releases a new concept of strategy which is ideologically acceptable within a newly appreciated context.

But how is this done, indeed prescriptively how can it be done? Is it possible to describe and codify the tasks and skills appropriate for such a contextually sensitive activity as managing strategic change without reducing the change process to a mechanical and over-determined set of phases or stages, and the activities of changing to a set of platitudinous generalities? Quinn (1980, 1982), with his discussion of logical incrementalism, has offered one prescriptive view of strategic change. Quinn describes and prescribes a process of strategic change which is jointly analytical and political and where executives are recommended to proceed flexibly and experimentally from broad concepts to specific commitments. A cautious step-by-step activity of building awareness of the need for change, legitimising new viewpoints and challenging old assumptions, making tactical shifts and finding partial solutions, overcoming and neutralising opposition whilst building political support around particular ideas, and then formalising commitment for action. Muddling through with a purpose, as he puts its.

Kanter (1983), on the other hand, sees a prototypical innovation having three waves of activity occurring in sequence or as successful iterations. Firstly information is acquired, sorted, and exchanged to shape the definition of a problem which may become the focus for change. Then coalitions are built, teams created, and individuals encouraged to buy in or sign on for the change in question. Finally there is a mobilisation and completion phase in which the boundaries and momentum for the change are maintained, opposition and interference is dealt with and the change proceeds through periods of secondary and subsequent redesigns until particular pieces of the change are implementable. Kanter (1983) sees champions for change ideas holding together and managing the above three-stage process. Using what she calls power skills to persuade others to invest information, resources, and support in new initiatives; team skills to share information, resolve differences, and generate enthusiasm and commitment to particular solutions; and change architect skills to design and construct micro-changes which are eventually connectable to macro-changes or strategic orientations.

Both of these prescriptive views of change put their fingers on important aspects of the practice of change, but both also under-emphasise or ignore other elements of the management task. Quinn's (1980) view captures well the additive, evolving, nature of the task but tends to underplay the role of environmental disturbance, and the contribution that changing features of intra-organisational context can play in creating a new pattern of learning, thought, and action as change proceeds. Kanter, on the other hand, clearly emphasises the power skills required to create change. How innovators have to compete in a knowledge market – a market-place for ideas; an economic market – where resources are required; and a political market for support and legitimacy. Her discussion of segmented and integrated contexts critically pinpoints how some contexts are more receptive and enabling of change than others, and indicates how the career of a change idea might crucially depend not just on power skills as such, but on skill in changing a context towards more integrative features whilst the change idea is being championed. But neither Kanter nor Quinn deal with the key management tasks of stabilising a change once changes have taken place or are taking place.

An approach to the practice of change management which is complementary both with the views of Kanter and Quinn and with the empirical findings of this study is that propounded by Johnston (1975). Johnston's argument is predicated on three assumptions. The first of these is that some evolution is occurring in a natural way in most organisations. Secondly that this natural evolution is in response to external pressures and is therefore retrospective and remedial, rather than preventative. And thirdly that any such change process absorbs a great deal of energy in the firm because it may require power redistribution, role changes, the abandonment of past practices and old ideologies, and restructuring. Johnston, building on these assumptions, makes an assertion highly compatible with the findings of this study that development or change processes are often dependent on a few people, reactive to the external world, and can peter out or be reversed. A way to try and prevent such regression or reversals is to conceptually understand the evolution of natural processes of change in organisations and to help establish an organisation process of change with the necessary internal skills, actions, and systems to maintain development in the direction sought. Prescriptively this means in the broadest sense that the first step in the change process should be to improve and build on any natural processes of change by tackling questions such as how can existing processes be speeded up, the conditions that determine people's interpretations of situations be altered, contexts mobilised to achieve practical effects, along the way to move the organisation perhaps additively, in a different strategic direction? Thus any adequate approach to managing change must be based on the principle of understanding the context, of knowing what you are dealing with, and of choosing as a starting point some area of movement that can be built upon. Of identifying something which is happening which has a significant group of early adopters linked to it, and where more than likely the energy for strategic change is based on the recognition of environmental pressure and an early sensing of a gap between the organisation's present and its desired future relationship with its business – competitive, and social, political, and economic environment.

For all its oversimplifications, including the tendency to assume both discrete and exclusive categories and linear sequential development, Johnston's (1975) four stages in the natural process of change do usefully capture broad elements of the descriptive processes of change elaborated in this book, and allow one to make sensible prescriptive statements about necessary management tasks at each of the four stages. The reader may recall the four stages are:

– the development of concern;
– the acknowledgement and understanding of the problem;
– planning and acting;
– stabilising change.

In fact the data from this study, particularly about the contribution of visionary leaders and early adopters in change processes, indicates the importance of an initial problem-sensing stage which may predate a stage of development of concern. In the sphere of strategic change signalling problems as worthy of attention and getting those problems a legitimate feature of corporate discussion and decision-making, is itself a time-consuming and politically very sensitive process. One of the contributions made by Lord Beeching and George Bridge in the 1960s, and by Harvey-Jones and Woodburn throughout the 1970s was to sense and flag key problems worthy of management attention. From a political process point of view it is critical not to rush prematurely from problem-sensing to planning and action in the change sphere. Actions recommended about problems which themselves are not yet accepted as legitimate topics of debate invariably produce the rejection of the change idea. The essence of the political learning process implied in this view of change is that individual sensing of problems must be complemented with activities which encourage some level of shared problem-sensing, spreading of development of concern about the emerging problem, and eventually broadly based understanding of the problem, if novel ideas for change are not to be imperilled at birth.

The development of concern stage assumes the presence of a small group of early-adopters, or even as we have seen from four of the five cases of change in this book the presence of a single visionary change leader, sensing and imprecisely articulating a performance gap between the organisation's present condition and some feature or featurts of its operating environment. The key management task here is to more broadly educate the organisation by building on the perspective, information, and contacts of the early-adopters. In effect to recognise the group doing this early sensing, to broaden the group by helping to connect them to peers, bosses, and subordinates with similar views, and to prepare more of a critical mass of people to help influence key power figures. This educational process may also involve getting unusual meetings going which cross existing organisational and departmental boundaries and help spread information and views and integrate such data around particular issues or problems. Key line managers or consultants may also be able to set up meetings where power figures receive and test data, or personally counsel individuals to act on the emerging views of the problem in parts of the organisation where at that point in time it is legitimate to do so. As we have seen from these studies of ICI, it can be valuable at this stage in the change process for deviants, even heretics, to think the unthinkable, and say the unsayable, and for key line managers to be persuaded to help break traditional patterns of thought by setting up unconventional meetings where the process of discussing the previously undiscussable can begin.

In the next stage, the process of trying to get acknowledgement and understanding of problems and issues which are emerging, the key management of change task is to help the early adopters and key power figures maintain and develop any structured dialogue about the problem, and avoid a tendency either to escape from the problem by for example projecting it onto others, or a precipitous and ill-considered rush into action before the present situation has been carefully diagnosed, change objectives clarified and agreed, and a process plan to move from the present to the desired future developed. This stage is not only critical in terms of perpetuating any ideological change now in process, but also is important in rational–analytical terms by exposing alternative diagnoses of the problem, exploring causes, and generating alternative solutions with reflections on their implications and the development of criteria for choosing a solution.

The data from the Mond change process and the corporate change process suggest that the above two stages of problem-finding, educating, and climate and tension-building for change are long processes with many iterations, blocks, deadends, and unpredictable areas of movement. Persistence and patience in championing change seems to be necessary to initiate and perpetuate this process of conditioning and influence, and deliberative attempts to alter the structural and cultural context of decision-making, and capitalise on environmental disturbances, seem necessary to break out from mere acknowledgement and understanding of problems into a stage of executive planning and action. We have seen that because radical changes require strong commitments and high motivations, they also presuppose the existence of ideological reorientations, and therefore the unequivocal availability of a new ideology which precisely and enthusiastically endorses the changes. Ideological reorientations can occur through the above processes of climate-building and education but major ideological change also requires other deliberate management action: efforts made to influence patterns of socialisation by changing career paths and reward systems; visibly using the newly promoted as role models to additively signal behaviour required in the new culture; using retiral situation to combine portfolios and responsibilities previously divided, and to release energy along sub-parts of the change problem previously deadlocked by individual power figures and sectional interests. Ideological reorientation may also be facilitated by breaking the global problem into actionable bits which reinforce one another, and by creating temporary or permanent task forces, coordination committees and business teams which resolve conflicts and imbue enthusiasms and commitment for action around pieces of the change.

Johnston’s (1975) otherwise helpful prescriptive view of change management tends both to underemphasise management action to change and thereby restructure the context in which change processes develop and the extent to which effective action in managing strategic change is dependent on mobilising environmental disturbances and crises in order to achieve practical effects. Gross changes in the environment of the firm can be orchestrated and capitalised upon to create opportunities for organisational learning, to destabilise power structures, and connect previously unrelated solutions around now more precisely stated and more enthusiastically supported organisational ideologies. But if crises provide ideological closure and therefore justification for action, it is evident that some organisations are more likely to be able to capitalise on the “window for change” provided by environmental disturbances than others. Here of course what has or has not happened in the pre-crisis circumstances may crucially affect the quality of planning and action taken to implement strategic changes. Paradoxically the delays and incremental movements in the development of concern and acknowledgement and understanding of problems stages, may have not only sensitised a wider set of people to the incipient problems, and enabled debates to occur around a variety of solutions, but also helped to draw out and test new leaders, possibly with the capabilities to manage the new circumstances, and if not with the opportunity to use temporary structures and administrative mechanisms to prepare the ground for new patterns of organisation. As we have seen in two of the five cases of strategic change reported in this book, management training and development experiences can be used in the pre-crisis situation to develop a common language for thinking about change management, and to increase the capability and capacities of managers to carry through operational change management tasks delegated to them by senior executives.

The planning and acting tasks in change management have been well codified and described in the concepts and techniques reported in Beckhard and Harris (1977) and Beer (1980). In the planning of change the most important tasks are; defining the present condition of the organisation in relation to its changing environment; clarifying the desired future state for the organisation in relation to its changing environment; building commitment around particular change objectives, and appointing transition managers to move parts of the organisation from the present through the transition state, to the change objective by the means of detailed and contextually sensitive action plans. As the Mond Division experience reported in this book indicates, this operational process of change management is greatly facilitated by unity of philosophy and purpose amongst the senior executives leading the change process. In the case of Mond Division this has meant giving clear, simple messages and maintaining those consistently and without dilution within a broad philosophy – which justifies and conceptually holds together a series of change initiatives.

If the top leadership role at the action stage in change management is to put tension into the organisation by providing a clearly articulated rationale for change and some consistently stated change objectives, the operating management responsibility is to plan and organise the use of this tension to generate movement. Here agreeing the targets of change and the form and timing of their publication is important. The publication process is really a contracting– negotiation exercise which takes into account the different positions of individual units, deals with possible differences in interpretation of the leadership message, and manages apparent conflicts in the implications of the messages. There is clearly a monitoring task to ensure progress, and a support task to ensure that problems inhibiting progress are dealt with creatively and ethically, and that operating managers are provided with a “political umbrella” for the risks they have to take.

A key to success in these kinds of change activities is the effective management of the links between the senior group leading the change and the operating managers carrying through the details of implementing particular changes. Even in crisis-driven circumstances the operating management role is likely to involve detail and grinding on over time, and is very dependent upon the leadership role being consistently maintained. If someone in an operating management role is close to acceptance of hard targets in his sphere of negotiated influence, his work could be undermined and even destroyed by a weakening of the leadership position.

As we have seen in this book strategic change is not just a question of justification and initial action, of making things happen, it is also a question of making things which happen stick. Here is the additional management task of stabilising changes of making sure that reward systems, information flows, and power and authority distributions support the newly emerging state. Since changes are often initiated by or otherwise associated with key figures, and changes often remain as long as those key figures remain, a critical part of the stabilisation process has to do with the development and choice of successors who will want to maintain the new situation, and more idealistically perhaps who will maintain and then initiate changes themselves when external pressure on the organisation makes further change appropriate.