Resistance, politics and uncertainty

Accounting Ahead | Original study resource | accountingahead.com.au

Resistance, politics and uncertainty

MODULE 6 | 6.6.2 | STUDENT COMPANION

Three more threats can undermine implementation: resistance at organisational and individual levels; the

politics and power that surround every strategy; and environmental uncertainty while the strategy is

being delivered.

Sources of resistance to change

Organisational sources Individual sources

Strategic inertia

Routines built for stability harden

Narrow implementation focus

One part executes; another doesn't

Group inertia

Group norms resist as one

Power relationships

Reallocation threatens influence

Habit and security

Familiar routines feel safe

Economic fears

Status, pay or skills at risk

Selective information processing

Filtering out what doesn't fit

Diagnose people, structure and technology early, and respond constructively

Examples: trying to build a customer-focused culture without changing a performance system that rewards

something else (narrow focus); a night-shift team that has always run things its own way (group inertia); a

partner convinced clients will always need someone to prepare their returns, who doesn't hear evidence that

software now does much of it (selective processing). Responses run from involving the people most affected

and explaining the reasons with evidence, through training, support and negotiation, to using authority only as a

last resort.

Politics and power. The politics of implementation is behaviour that advances someone's own status, position

or power: chasing promotions, budgets or authority, sometimes by damaging a rival's reputation. Organisations

are political arenas of individuals and groups with differing interests. Politics is how differences are worked out

by consulting and negotiating; power is what finally settles them (power at rest, politics as power in action).

Perrow (1986) saw power as the ability to obtain valued outcomes that others also want; Whittle and Mueller

(2010) showed strategy is shaped by social, political and institutional forces, not just rational analysis. Behind

every written plan there is often an unwritten one.

GLOBAL STRATEGY AND LEADERSHIP | M6 | 6.6.2 | STUDENT COMPANION

1

Accounting Ahead | Original study resource | accountingahead.com.au

What managers should do

Action Detail

Accept that planning is political And that personal values affect it

Use planning for several

purposes

A means of control and of resolving conflict; a process for bidding for resources; a

channel of communication

Carry out five responsibilities Make the need clear; allocate enough resources; smooth the way; hold key

people accountable; develop and empower them

Keep politics healthy Encourage differing views to build understanding; too much tension creates

anxiety and stalls progress

Four tactics for productive conflict

1. Debate the facts

More information keeps attention on issues, not personalities

2. Multiply the alternatives

Several options enrich the debate and reduce conflict

3. Balance the power

A fair process, with real input from those with expertise

4. Decide without forcing consensus

Seek agreement; if it doesn't come, the most relevant senior

manager decides, informed by the group

After Eisenhardt, Kahwajy and Bourgeois (1997)

At Corella Partners (imagined): compliance partners fear losing power and income (economic fears, power

relationships), and office heads lobby to keep their budgets. Corella shows the evidence of falling compliance

fees, asks office heads to design two alternative ways of sharing budgets, guarantees each office a voice on the

national teams, and agrees that the managing partner decides if consensus fails. Its written plan promises

advice at 40% of fees within three years; the unwritten one accepts that two offices may merge if targets are

missed.

GLOBAL STRATEGY AND LEADERSHIP | M6 | 6.6.2 | STUDENT COMPANION

2

Accounting Ahead | Original study resource | accountingahead.com.au

When the environment shifts

A temporary or contained change

For example, a three-month supply disruption

Adjust the implementation now

A lasting shift

For example, customers steadily changing how they buy

Adjust now; revisit the strategy in the next cycle

A dramatic shift

For example, a new law that blocks the strategy

Rethink the strategy now

Usually, change alters how a strategy is implemented, not the strategy itself

Some changes can be anticipated through risk management; others can't, and regulation is a frequent source of

surprise. If a recession hit in Corella's second year, the strategy would still make sense, but implementation

would adapt: delay the academy's second intake and promote cash-flow advice.

Case note: Hewlett-Packard and Compaq

In September 2001 Hewlett-Packard, led by chief executive Carly Fiorina, agreed to buy its rival Compaq in a

deal then worth about US$25 billion. Walter Hewlett, a board member and son of a co-founder, opposed it,

backed by David Woodley Packard and the Packard Foundation, and launched a bitter contest for shareholders'

votes. In March 2002 the merger was approved with 51.4% of the votes; Hewlett's lawsuit challenging the vote

was rejected on 30 April, and the merger completed on 3 May 2002. In 2003 the SEC fined Deutsche Bank's

asset-management arm US$750,000 for failing to disclose a conflict when it switched its votes. Divisions

lingered, and the board forced Fiorina out in February 2005. Winning the vote was not the same as winning

commitment.

Sources: HP-Compaq merger announcement, 3 September 2001; InternetNews, May 2002; HP Form 8-K, 3 May 2002; US Securities

and Exchange Commission, August 2003.

GLOBAL STRATEGY AND LEADERSHIP | M6 | 6.6.2 | STUDENT COMPANION

3

Accounting Ahead | Original study resource | accountingahead.com.au

Practice questions

MODULE 6 | 6.6.2 | TRY THESE BEFORE THE WORKED ANSWERS

Question 1 - Name the source of resistance

Seabreeze Hospital is introducing electronic patient records.

Behaviour at Seabreeze Hospital (imagined) Source

(a) Senior surgeons say paper charts have worked for forty years

(b) Ward clerks fear their jobs will disappear

(c) Radiology, proud of its own system, refuses as a team to switch

(d) The records manager, whose department will shrink, delays approvals

(e) Nurses dismiss reports of time saved at other hospitals

(f) The rollout is excellent, but rosters still assume paper rounds

Question 2 - A budget dispute

At Northwind Outdoor (an imagined retailer), the stores division and the online division are fighting over next

year's marketing budget, and meetings have turned personal. Apply the four tactics for productive conflict.

Question 3 - Strategy or implementation?

Shock facing Pelican Air (imagined) Response and why

(a) A volcanic ash cloud closes airports for a week

(b) The government will heavily tax short flights from

next year to favour rail

(c) A rival runs a two-month fare sale

GLOBAL STRATEGY AND LEADERSHIP | M6 | 6.6.2 | STUDENT COMPANION

4

Accounting Ahead | Original study resource | accountingahead.com.au

Worked answers

MODULE 6 | 6.6.2 | WORKED ANSWERS - ATTEMPT THE QUESTIONS FIRST

Question 1 - Seabreeze Hospital

Behaviour Source of resistance

(a) Paper charts have worked Habit and security (and strategic inertia)

(b) Clerks fear for jobs Economic fears

(c) Radiology refuses as a team Group inertia

(d) Records manager delays Power relationships

(e) Nurses dismiss evidence Selective information processing

(f) Rosters assume paper Narrow implementation focus

Question 2 - Northwind Outdoor

Facts: bring data on sales, customer journeys and the return on each channel's past marketing

Alternatives: ask each division for two or three budget splits, including joint campaigns

Balance: give both heads equal time and a neutral chair; involve marketing analysts

Decide: seek agreement; if it doesn't come, the chief executive decides, guided by the discussion

Question 3 - Pelican Air

Shock Response

(a) Ash cloud Implementation only: temporary; rebook passengers, protect cash, communicate

(b) Short-flight tax Strategy: a permanent, dramatic shift; rethink routes and the network now

(c) Fare sale Implementation: respond tactically with targeted offers; the strategy stands

GLOBAL STRATEGY AND LEADERSHIP | M6 | 6.6.2 | WORKED ANSWERS

5