Understanding power to achieve radical transformational change

Citation

Morris, T. (2013), "Understanding power to achieve radical transformational change", Strategic HR Review, Vol. 12 No. 1. https://doi.org/10.1108/shr.2013.37212aaa.007

Understanding power to achieve radical transformational change

Article Type: HR at work From: Strategic HR Review, Volume 12, Issue 1

Short case studies and research papers that demonstrate best practice in HR

Tim Morris, Namrata Malhotra and Thomas B. LawrenceTim Morris is a Professor at Saïd Business School, University of Oxford. Namrata Malhotra is at Imperial College Business School, Imperial College London. Thomas B. Lawrence is a Professor at the CMA Centre for Strategic Change and Performance Measurement, Simon Fraser University, Vancouver.

This paper outlines the findings of our research on the role of power in transformational change. The context of our research was the UK legal industry in 1990-2003, a period ushered in by a wave of critical economic and regulatory changes, including the wave of privatization and a restructuring that started in the 1980s.

The late 1980s had also witnessed the rise of financial services facilitated by the liberalization of capital markets and statutory changes, including the Financial Services Act, and a corresponding decline of manufacturing – a development, incidentally, that is the object of much current concern. Simultaneously, there were significant technological changes in the financial markets such as “Big Bang,” which involved both the liberalization of stock trading and the emergence of computer-based trading.

Taken together, these developments increased demand for legal services and prompted institutional and market changes in the late 1980s, including significant consolidation and increased competition in the legal industry. In turn, these developments put pressure on law firms to become more efficient, which provided the impetus for firms to transform from operating as traditional professional partnerships to structuring themselves as managed professional businesses. However, these moves were not uniformly adopted across firms and had only mixed success.

Exploring the role of power

Viewing change as a political project, we explored the role of power in asking why some attempts to transform professional service firms into professionally managed businesses have resulted in more complete transformations than others. We looked at three law firms that experienced this kind of organizational change.

The first, “Alpha-Omega,” was the product of a merger in the latter half of the 1990s between two London firms. By 2003 it had 140 partners and 500 professional staff mainly located in London. The second firm, “Litigator,” had been founded in the late nineteenth century and by 2003 had 110 equity partners and 550 professional staff. The third firm, “Corporate,” another long-standing London firm founded over one hundred years ago, had 160 partners and 600 professional staff by 2003.

Two key questions

Understanding the role of power is an immensely important issue for people trying to manage organizational change. Managers often assume power is “episodic” – that it consists of strategic acts of mobilization by self-interested actors. However, power should also be thought of as “systemic” – working continuously through technologies, routine practices and cultural systems (Lawrence, 2008).

While previous research has proposed a recursive relationship between these two forms of power, the specific mechanisms that link the two forms of power have been largely neglected. Our research focused on the following two key questions:

1. 1.

   How do patterns of systemic power provide the scope for individual power to intervene and set in motion radical change?

2. 2.

   How can exercises of episodic power in turn generate the organizational power that institutionalizes transformational change?

The link between different power forms

Our research highlighted two mechanisms that fill this gap. First, one powerful way to initiate change is to make immediate and explicit changes in the way authority is structured in the organization (for instance, by decentralizing a centralized organization or vice versa). However it is critical that changes be legitimated by connecting to existing routines and appealing to the prevailing culture – that is, the existing pattern of systemic power in the organization. By so doing, managers both mobilize support among organizational members and defuse opposition arising from concerns that the changes betray the organization’s fundamental values.

Second, our study showed that transformational change is more likely to be successfully institutionalized when the new and altered systems that are at the root of systemic power are legitimated by key actors through the skilled use of language to help people appreciate their value in the day-to-day working of the organization. Attention to the day-to-day language that describes such changes makes more real and gives supportive meaning to what may be seen as abstract systems. Importantly, the key actors then allow the systems to operate independently without intervention. Although the architects of such systems may tend to focus on the technical requirements and interdependencies of financial, HR and information systems, their success depends just as much on evangelists who can trumpet their value and lead to the broad acceptance necessary to cement their role in the intended change.

Figure 1 shows the recursive relationship between episodic and systemic power with the mechanisms linking the two forms of power.

Power interplays in practice

Among our three cases, Corporate was most successful in transforming toward a professionally managed business. What we observed as distinctive about its trajectory of change was that both linkages between episodic and systemic power emerged.

First, systemic power created the potential for the exercise of episodic power. Instances of episodic power that initiated changes to the authority structure in the firm clearly legitimated the change with reference to prevailing traditional values. Second, episodic power legitimated systemic power. Significant changes to systems that were made during the transformation were enthusiastically legitimated by change sponsors through the use of persuasive language (e.g. visible use of more corporate language) and these key actors allowed the new systems to run independently of their day-to-day influence.

In contrast, in the case of Litigator where the transformation was incomplete, we observed that, although the exercise of episodic power to centralize authority was legitimated by connecting to prevailing patterns of systemic power, the linkage in the other direction was missing. In other words, in spite of major changes to systems such as HR, Finance and IT, these altered systems were not institutionalized in day-to-day practices and routines. Moreover, the operation of systems on a day-to-day basis was met by continued interference from key actors. In our third case, Alpha Omega, also change was unsuccessful and we found that both the linkages connecting episodic and systemic power were missing.

Power the key to the change process

Our study was based on large UK-based law firms where the partnership form of governance and strongly held ideas of professionalism influence the day-to-day tasks. However they present a useful scenario to understand complex power dynamics more generally. We believe therefore that our findings are also directly relevant to other kinds of professional service firms and, more widely, to professional bureaucracies such as universities and hospitals, and to all other organizations categorized as “pluralistic” organizations (Denis et al., 2001). The idea of pluralistic organizations refers to those where the command and control model of management is limited and there are multiple sources of power besides that associated with management hierarchies.

Our findings emphasize that managers have to think about power more broadly than they are used to. Managers interested in effecting complete cycles of transformational change need to understand both the distinctive roles of episodic and systemic forms of power and the critical mechanisms that link them and underpin their effectiveness. Furthermore, attending to the interaction of the two types of power and the mechanisms that link them is important in order to manage change effectively.

Managers attempting to move their organizations through radical transformations need to recognize the inherently political nature of the process, from the early strategic decisions that set a firm’s direction to the rolling out of organizational systems and processes that embed the changes. Our study shows that every step of the change process is tied to a form of power and that failing to utilize power appropriately, because the need is not recognized or a mistaken belief that good ideas will carry the day, will result in an incomplete and only partially successful process of change.

About the authors

Tim Morris is Professor of Management Studies at Saïd Business School, University of Oxford and is in addition a founding member of the Novak Druce Centre for Professional Service Firms and a project director in Oxford University’s Centre for Corporate Reputation. Tim Morris is the corresponding author and can be contacted at: tim.morris@sbs.ox.ac.uk

Dr Namrata Malhotra is an Assistant Professor in Strategy in the Organization and Management Group at Imperial College Business School, Imperial College London and an Associate Fellow in the Novak Druce Centre for Professional Service Firms at the Saïd Business School.

Thomas B. Lawrence is the W.J. VanDusen Professor of Management, director of the CMA Centre for Strategic Change and Performance Measurement, and academic director of the PhD Program at the Beedie School of Business, Simon Fraser University, Vancouver, Canada.