Change Leadership: Case Study of a Global Energy Company

Similar dilemmas arise from a review of the literature around the challenges of implementing change successfully. There is, however, agreement that adders play a significant role in resolving these dilemmas in the process of implementing strategic change within global organizations. This paper explores the literature on global organizations and change leadership. Building from this review, the paper presents the findings from a case study which explores the implementation of a global strategy within a large energy corporation.

Based on a review of nine interviews, internal communication documents, and employee attitude survey data we found that change approaches which recognize the complexity of change combined with an involving and engaging leadership style end to result in successful change implementation. In addition, the balancing of the global/local dilemma by leaders contributed notably to change success. We conclude with suggestions for further research and a brief discussion of the implications of the findings for the development of leaders capable of working effectively in a global organization.

Copyright @ 2009 John Wiley & Sons, Ltd. Introduction For many years organizations operating on a global basis have struggled with achieving an effective balance between global standardization and local differentiation in terms of implementing strategies and related policies and recesses (e. G. Maligning, 1995; Shoal and Bartlett, 1999). In broad terms there appear to be both assertions and evidence to support the view that achieving effective globalization * Correspondence to: Malcolm Highs. Southampton University School of Management, Hightailed, Southampton, SASS BIG, I-J.

E-mail: Malcolm. [email protected] AC. UK requires the implementation of a range of ‘loose/tight’ couplings which allow for centralization around core values/principles/ products/routes to market whilst simultaneously allowing for extensive decentralization to promote local innovation (e. G. Pettier, 1979; Scheme, 1985; Clavicle et al. , 1999; Shoal and Bartlett, 1999). Within a global context there is an apparent general view that local innovation provides a key to the development of competitive advantage (e. G.

Maligning, 1995; Dickinson and Mјleer-Came, 2006). However, realizing this advantage requires facing dilemmas around the balance between innovation and bureaucratic control (Shoal and Bartlett, 1999; Copyright @ 2009 John Wiley & Sons, Ltd. Strategic Change Malcolm Highs and Deborah Rowland Within a global context there is an apparent general view that local innovation revised a key to the development of competitive advantage Moonlight, 1995) and being able to balance domestic and international tensions (Permute, 1969; Dickinson and Mјleer-Came, 2006).

In an international study, Dickinson and Mјleer-Came (2006) identified that the core values of an organization tend to determine the nature of global/local balance. For example, organizations which place a high value on innovation tend to place greater emphasis on the achievement of local autonomy within a global framework. On the other hand, in a strategic implementation, Expert and Williams (2006) minted out that the power of local managers to make strategic choices is as much a function of the strategic position and performance of the local unit as of the overall approach of the organization.

These tensions appear to create dilemmas to be faced by local leaders and conditions of ambiguity (Waldron, 1992; Grumman, 2005). Furthermore, in such a context there is an increasing demand on leaders to make judgments relating to actions which will lead to effective change implementation (State, 1996; Essential et al. , 1999; Goodman and Rousseau, 2004). In order to explore this further, we examine the literature n change implementation and its leadership, particularly in a global context. Flawed approach. This line of argument is reinforced by the work of Pettier (2000) and Ruggeri et al. 1999). Pettier critiques much of the change literature in terms of general absence of consideration of contextual issues and the consequent adoption of a universalistic view of change approaches. He argues for the adoption of a contingent approach to corporate change. Research conducted by Dungy and State (1993) presented case study evidence to support the value of a contingent change paradigm. Indeed, these findings ND arguments tend to reinforce the broader issues in relation to globalization outlined above.

It is evident that implementing global strategies represents a complex change (Pettier, 2000; Stacey and Griffin, 2005; Dickinson and Mјleer- Came, 2006). However, much of the earlier change literature posits a paradigm anchored in a linear mind-set which sees change as a largely sequential process Operating and competing in a global context frequently gives rise to the challenges of implementing change successfully in differing business areas and cultures (e. G. Cotter, 1 995; Beer, 2000; Pettier et al. , 2001; State and Ball, 008).

Building from this, Highs and Rowland (2005) conducted an extensive review of the change literature and identified two core axes around which change approaches could be organized. These were: (i) Linear versus complex. At the linear end, underlying assumptions of predictability and scope for sequential implementation underpin the approaches to change. At the complex end, change is viewed as a complex phenomenon and approaches took account of complexity theory and encompassed systemic thinking. Strategic Change DOI: 10. 002/SC Change implementation challenges of implementing change successfully in differing business areas ND cultures. However, as State (1996) points out, the ability to adopt change strategies which are successful in one area and apply them across a global organization is a [email protected] 2009 John Wiley & Sons, Ltd. Change leadership in global organizations Change approach Linear vs.. Complex Standardized vs.. Differentiated Directive Self-assembly Master Emergent Linear Linear Complex Complex Standardized Differentiated Standardized Differentiated 47 Source: Adapted from Highs and Rowland (2005).

Figure 1. Typology of change approaches. In the context of globalization it does appear that the major judgments relate to incinerations of standardization versus differentiation (ii) Standardization versus differentiation. The standardization pole represented a viewpoint that change is implemented in a global/’one-look’ frame, whereas differentiation set the change goals but envisaged local differentiation in implementation. From this review they developed a typology of change approaches. This is summarized in Figure 1.

In a field study, Highs and Rowland (2005) adopted a collaborative research design (Huff, 2000) and conducted an analysis of 80 change stories obtained from interviews with change leaders to sees the efficacy of differing change approaches across a range of contexts. From the analysis they found that approaches rooted in a linear paradigm were unsuccessful in any of the contexts examined. The ‘Master’ approach (Complex: Standardized) was very successful in a context of long-term change (i. E. Changes over a period of 18 months or more) and in a context of ‘continuous’ change.

The ‘Emergent’ approach was particularly successful in contexts of both high magnitude and short-term change. These findings provided a degree of support for the assertions of other authors in the field (e. G. Whitley, 1 993; Whetting et al. , 1 999; Griffin, 2002; Goodman and Rousseau, 2004; Stacey and Griffin, 2005). The contingent view of change implies that leaders have to make judgments, in respect of change approaches to be adopted, within the different contexts which they face (e. G. State, 1996; Whetting et al. 1999,’ Pettier, copyright @ 2009 John Wiley & Sons, Ltd. 2000; Goodman and Rousseau, 2004). In the context of globalization it does appear that the major judgments relate to considerations of standardization versus differentiation. This would suggest that in considering and researching hanged it may be appropriate to focus on the standardization versus differentiation axis as proposed in the Highs and Rowland (2005) model (on the basis that the evidence indicates the inefficacy of the linear mind-set).

In a sense, this axis captures the broader global versus local debate. Leadership, globalization and change Kramer (2005), in commenting on a survey of 81 executives, contends that a significant challenge for organizations operating in a global context is to develop leaders capable of achieving the global/local balance discussed above. Ye (2006) supports this view and asserts that even the best lobar strategies can fail if an organization does not have a cadre of leaders with the required capabilities at the appropriate levels in the organization.

A key challenge for leaders in this global context is seen to be to ‘marry the corporate culture with the foreign business environment creating the flexibility in that culture to account for the expression of local values and operation methods’ (Kramer, 2005, p. 8). Within a global context it is asserted that the leader’s role is more to act as an enabler articulating strategy and organization (Wick et al. , 2005; Clavicle and Murphy, 2006). In a specific case study, Clavicle ND Murphy (2006) also identified that strategy and organization Strategic Change DO: 10. 002/SC 48 Within a global context it is asserted that the leader’s role is more to act as an enabler articulating strategy and organization emerged from local cumulative actions at multiple levels within the organization. In the context of the global/local tension they suggest a frame for the dilemma: ‘ .. Strategy becomes a broad-based compass for setting direction, to which local strategies are organized through the power of individual leadership’ (Clavicle and Murphy, 2006, p. 673).

This iterative view of strategy and the significance f leadership in a global context is endorsed by many authors (e. G. Child, 2005; Kramer, 2005; Ye, 2006). At the same time, the significance of leadership behaviors is asserted to increase in the implementation of strategic change initiatives (e. G. Child, 2005; Highs and Rowland, 2005; Sparrow, 2006; Ye, 2006). However, in examining the leader’s role and behavior in the change process, few studies have moved beyond generic descriptions (e. G. Dairy and Klein, 1991; Denis et al. , 1996; Essential et al. 1999; Gill, 2001; Wick et al. , 2005). An exception to this is provided by the studies of Highs and Rowland (2000, 001 which specifically linked leadership behaviors to activities involved in implementing change. However, the work of change in those studies was rooted in a view of the change process which required high levels of involvement and organization-wide conformity. Some have questioned the efficacy of such a view within a complex and wide-ranging change context (e. G. Whitley, 1993; Whitley and Keller Rogers, 1996; Sense, 1997; Igloo et al. , 1998).

In particular it is argued that a different perspective arises in the context of a complex and distributed view of change (Sense, 1997; Gasworks, 2000; Whitley, 2000). In such a context it is argued that the leaders role becomes more important in terms of making Copyright @ 2009 John Wiley & Sons, Ltd. Judgments relating to the change approach to be adopted (e. G. Denis et al. , 1996; State, 1996; Essential et al. , 1999; Whetting et al. , 1999; Goodman and Rousseau, 2004). If change is perceived as complex and emergent, then Whitley (2000) argues that leaders must be brought to a transformational edge so that they can work differently.

However, beyond such theoretical conjecture, limited empirical research has been conducted which explores a broader relationship teens leadership and differing approaches to change. One study that did explore this relationship was reported by Highs and Rowland (2005); in this they identified three distinct groupings of change leadership behaviors. These were: 1 . Shaping behavior. The communication and actions of leaders related directly to the change; ‘making others accountable’; ‘thinking about change’; and ‘using an individual focus’. 2. Framing change.

Establishing starting points for change; ‘designing and managing the journey’; and ‘communicating guiding principles in the organization’. 3. Creating capacity. Creating individual and organizational capabilities’ and ‘communication and making connections’. Furthermore, they identified that the literalistic ‘Shaping behavior’ impeded change initiatives and failed to be identified as a causal factor of change success. On the other hand, they found that both ‘Framing change’ and ‘Creating capacity’ clearly and positively impacted on change success.

These successful behaviors evidence a broadly involving and enabling leadership approach. This provides further support for the view that such leadership behaviors are increasingly significant in complex contexts (e. G. Gasworks, 2000; Gill, 2001; Highs, 2003; Kramer, 2005; Wick et al. , 2005; Clavicle and Murphy, 2006). Highs and Rowland (2005) also found that these two categories of leadership behavior were predominantly encountered within change approaches which recognized the complexity of the Strategic 49 phenomenon (i. E. The ‘Master’ and ‘Emergent’ approaches shown in Figure 1).

Summary From the foregoing review it is evident that, for a global organization, a key dilemma relates to the achievement of a ‘loose/tight’ or ‘global/ local’ balance appropriate to underpin the achievement of the overall business strategy. Proposition 2. In a global context organizations which adopt an approach to change which recognizes its complexity will be more successful in implementing the change than those which adopt a linear and sequential approach (e. G. Grumman, 2005; Highs and Rowland, 2005; Kramer, 2005; Ye, 2006).

The role of leaders (throughout the organization) is critical to the implementation of change and to achieving the global/local balance and trade-offs (Kramer, 2005; Clavicle and Murphy, 2006). Leadership styles which work within a complex world-view of change are more likely to achieve a balanced global strategy and related change implementation. Hence: Proposition 3. In a global context leaders whose behaviors fall within the ‘Framing and ‘Creating’ categories are more likely to be successful in implementing change strategies than leaders who adopt a more leader-centric approach (e. G.

Gasworks, 2000; Gill, 2001; Highs and Rowland, 2005; Kramer, 2005; Wick et al. , 2005; Clavicle and Murphy, 2006). For a global organization, a key dilemma relates to the achievement of a ‘loose/ tight’ or ‘global/ local’ balance appropriate to underpin the achievement of the overall business strategy In addition, it is evident that competing in a global context entails being able o implement change effectively. The more recent change literature and the empirical work reported above (Highs and Rowland, 2005) suggests that this may be best achieved by adopting an approach to change which recognizes the complexity of the phenomenon.

Hence: Proposition 1. In a global context organizations which balance core principles with local needs and input will be more successful in implementing change than those in which the central organizational approaches dominate (e. G. Shoal and Bartlett, 1999; Pettier, 2000; Dickinson and Mјleer-Came, 2006; Expert and Williams, 2006). Copyright 2009 John Wiley & sons, Ltd. Study design The above propositions were explored using a single-organization case study. This was selected as an approach as the focus of the study was a contemporary phenomenon within a real-world context (Yin, 1989).

As Yin points out, such a strategy (including a singleness study) can be used to pursue both an explanatory as well as an exploratory purpose. Within this context the unit of analysis is an Strategic Change DOI: 10. 1 002/SC 50 ‘event’ which, in this study, relates to a global organization’s movement from an international to a global way of operating. The case-study organization is a major energy company which operates globally. While operating clearly within one brand, this organization had for decades been run as a decentralized and locally autonomous organization, operating in over 100 countries around the world.

In the past decade the company initially moved from a country-based to a regional organization and then from a regionally based to a globally organized business. Prior to this change each country had its own separate governance structure and ran multiple business units with Profit and Loss (P) integration at the country level. The company has faced the change of moving towards being organized along global lines of business with centralized decision making, global reporting structures, standardized business processes and systems (SAP), and global P.

The company needed to standardize and simplify its offers to customers around the world, build global talent pools of professional talent and expertise, and each global line of business required a single strategy The drivers behind the change have been: (i) shareholder pressure ? costs (overheads) were too high to be able to meet expectations of shareholder return; ii) financial performance overall had been stagnant and successful best practices were not being shared and optimized across the business; and (iii) duplication of effort and inefficiency with poor economies of scale (e. G. Placated back-office structures and systems in every country). The company needed to standardize and simplify Copyright @ 2009 John Wiley & Sons, Ltd. Its offers to customers around the world, build global talent pools of professional talent and expertise, and each global line of business required a single strategy a single set of activities and one way of doing business. The need was for culture of simplicity, reduced complexity, and increased speed and agility. Unsurprisingly, and particularly in a culture of ‘not invented here’, this change in the early years led to significant skepticism and doubt.

The change challenge for leaders has been how to implement globalization and standardization while taking into account significant cultural diversity and providing space for innovation and responsibility at local levels. The design of this case study was informed by the embedded (multiple unit) approach (Miles and Huber, 1984; Yin, 1989) and the sources of data were: (i) interviews with a sample of leaders ran from different parts of the business and different geographic locations; (ii) documentary evidence (e. G. Popes of communications/presentations made by each leader); (iii) secondary data (primarily results of the organization’s employee satisfaction/attitude surveys); and (iv) a panel assessment of the success of the implementation of the required changes in each of the interviewed leaders’ part of the organization. This panel comprised global leaders from within the company, local directors, and ‘experts’ (including consultants and academics). In identifying a sample for this study a ‘convenience’ approach was adopted (Hair et l. 1995). In pursuing this sampling strategy the limitations relating to bias and potential generalizations were acknowledged (Moser and Kiloton, 1 972; Hair et al. , 1995). Each interview with the sample leaders lasted between one and one-and- a-half hours. The interviewees were asked to talk about the changes which they had implemented in the context of the overall organizational change. In order to address issues of recall (Moser and Kiloton, 1972), a critical incident approach was adopted (Flanagan, 1954).

All interviews were recorded and transcribed. The transcripts were subsequently analyzed using coding frames developed from the elevate literature Strategic Change DOI: 10. 1002/SC 51 (Miles and Huber, 1984). Specifically, these related to: (i) Change approach (e. G. Griffin, 2002; Highs and Rowland, 2005; Stacey and Griffin, 2005). (ii) Leadership style (e. G. Gill, 2001; Highs and Rowland, 2005; Kramer, 2005). (iii) Global/local balance (e. G. Shoal and Bartlett, 1999; Clavicle and Murphy, 2006; Expert and Williams, 2006).

The categorization of change approaches and leader behaviors was based on the model proposed by Highs and Rowland (2005). Success was rated on a five-point scale (1 being low) and global/local Ochs was rated on a five-point scale with 1 representing a predominantly local approach and 5 a predominantly global approach. Engagement levels were categorized as high, medium, or low based on the organization’s categorization of business unit employee engagement scores. The overall analysis of the data was structured to seek generalizations of the data by reference to the extant literature (Yin, 1989). Adopted a change approach recognizing complexity (Master) and a leadership style focusing on building capacity (Creating), their results were less successful than others adopting this style. However, in both cases the global/local balance appeared to be directed more towards the global requirements (i. E. A strong focus on standardization). In general, the more successful implementation approaches tended to either overtly or implicitly address the global/local dilemma. One approach to addressing this entailed open sharing of the dilemma involved in implementing the global strategy.

For example: couldn’t run 144 countries continuously so I found a way for people to interact with me as the program manager … And there were certain things where I was totally open about how we did it … N other things I was pretty clear, it’s got to be like this, we’ve made the decision … Further out I was trying to canvass, I wanted them to hear each other so they shared in my dilemma of the fact that different countries wanted different things. Leader A Findings The original sample of interviewees comprised 13 change leaders within the organization.

Having conducted the interviews it was found that four of the interviews yielded data which related to local changes that were unconnected to the global strategy. These were discounted from the analysis (leaving a balance of nine global change stories). Table 1 summarizes the analysis of the sample interviews, providing a picture of the nature of the business, success of strategy implementation, dominant change approach, dominant leadership behaviors, and employee reaction/engagement (using employee survey data).

From Table 1 it is evident that there is some support for the findings of Highs and Rowland (2005) in terms of both change approach and leadership behaviors. However, it is interesting to note that whilst Leaders E and F both Copyright @ 2009 John Wiley & Sons, Ltd. Had to create one culture and one integrated organization … Nearly every ay I was meeting with parts of the organization, explaining what we wanted to achieve, giving feedback, listening to their concerns and doubts.

Leader D I had to create one culture and one integrated organization nearly every day I was meeting with parts of the organization, explaining what we wanted to Strategic Change DOI: 10. 1002/SC 52 Table 1 . Summary of findings Assessed Change Success 4 Creating Capacity Creating Capacity Shaping Creating Capacity Creating Capacity Creating Capacity Creating Capacity Creating Capacity Master High Master High Master Medium Master Medium Emergent High Directive Low Master Medium Master High

Dominant leader behavior Dominant change approach Employee engagement levels Commentary Respondent Area of Business Global versus local Operations 2 Very successful global capability building project that had clear global outcomes, yet whose process was totally driven and informed by local input. Integrated financial accounting services into shared services centre across 8 countries. Lots of dialogue and engagement. No attrition despite initial resistance to change. One IT and reporting system implemented across 18 countries. Not enough effort given to post-implementation support.

Local integration of a company into a lobar organization. The leader listened to and represented the acquired local organization in the global entity, while staying firm on the ‘absorption’ agenda. 5 countries put together, produced new customer value proposition – very self directed vision from the leader, told people to ‘be champions’. Globalization of marketing function, very tight central control, felt very vertically driven. Local to regional restructuring of the supply organization. Key was the leader establishing belief in the business outcome/value add of working across countries.