Case study of “The Chief who helped paint Akzo out of a corner”

By | March 22, 2013

Case study of “The Chief who helped paint Akzo out of a corner”

 

1.        Question 1

 

1.1    Depth of intervention of Hans Wijers’ appointment

 

1.1.1            Toffler’s model of depth of organizational intervention[1]

 

The term intervention depth refers to the range of planned and structured activities engaged in by the change agent (Szilagyi & Wallace 1987). Alvin Toffler literally invented the role of the futurist with the publication of his seminal work, Future Shock, creating an all new discipline around the study of change and its impact on business and culture (Leighbureau.com 2010). In his book The Third Wave Toffler describes three types of societies, based on the concept of “waves”—each wave pushes the older societies and cultures aside. First Wave is the society after agrarian revolution and replaced the first hunter-gatherer cultures; Second Wave is the society during the Industrial Revolution and third Wave is the post-industrial society.

 

1.1.2            Depth of intervention after Hans Wijers’ appointment

 

Schmuck and Miles (1971) include individual, group, intergroup and organization in their classification of units that can be the target for change. As seen from the case, we can see that after Hans Wijers’ appointment, his changes in term of depth of intervention could be described as below. By cutting off some non-core procedures in the underperforming chemicals division and Stop the haemorrhaging in pharmaceuticals business division by reducing the cost and also various adjustments in other business and procedure, it could be said that changes are group based rather than other three depths.

 

1.2    Changes made by Hans Wijers since his appointment

 

1.2.1            Stop the haemorrhaging in pharmaceuticals business division

 

The first change that proposed by Hans Wijers was to sort out the pharmaceuticals business division which was on the brink of failure due to the failure to obtain the approval for the antidepressant Japirone while there had been no alternative blockbuster drugs. Rather than the highly expected “cutting off” the pharmaceuticals business division, Hans Wijers had high hope for the business and he at the beginning focused on cutting cost to protect the margins and then replaced the management team and also trawled by the drugs pipeline to see if any held particular promise. With these efforts invested, the company later with Pfizer jointly developed asenapine, an anti-psychotic drug as well as a fertility treatment close to entering late-stage trials.

 

1.2.2            Slim down the underperforming chemicals division

 

After putting out the fire in the pharmaceuticals business division, Hans Wijers turned to the chemicals division and soon adopted the strategy of cutting off the non-core and loss making units and the disposals of these units had brought substantial cash inflow to the company.

 

1.2.3            Turn around the pensions liabilities

 

Another change is on the pension liabilities by brokering a deal with the Dutch unions to change from a final salary to a defined-contribution scheme to better motivate the employees by offering flexible pension scheme that established link between pensions and the employee performance.

 

1.2.4            Focusing on coating business

 

After making the decision that the company would focus on the coatings, Hans Wijers brought in two major changes: the first change is to increase the investment in the coatings by a series of targeted acquisitions; another change is to expand the oversea market ambitiously with the focus on the emerging markets such as China. Business operations followed these changes soon after the decisions had been made.

 

1.3    Nature of changes made by Hans Wijers

 

I would say that these changes proposed by Hans Wijers together represent strategic change. Before talking about the nature of the changes, let’s define the term strategic change. Strategic changes are discontinuous changes embracing the whole organization including culture, strategy, structure, people and processes (Shyni 2005, p.20). There are two kinds of strategic changes: reactive changes which include change made in direct response to external events and anticipatory changes which refer to changes made in expectation of the future events. The above changes are obvious the first types of changes which are reactive ones. And these changes proposed by Hans Wijers together represent reactive strategic changes for the following reasons: overall change in strategic focus, change in management structure and change in the process.

 

Regarding the overall change in strategic focus, as mentioned above, Hans Wijers had made the decision that the company would focus on the coating business while cutting off the non-core and loss making units in the chemical division, such changes in the business focus represent changes in the strategic focus of the company.

 

In term of the changes in management structure, as Hans Wijers had high hope for the pharmaceuticals business division though there was pressure to cut it away, he at the beginning focused on cutting cost to protect the margins and then replaced the management team. The replacement and adjustment happened in the management of the business division represent changes in the management (people) as described in the above definition of strategic changes.

 

And regarding the changes in the process, we can see such changes from the fact that the company brokered a deal with the Dutch unions to change the pensions liabilities from a final salary to a defined-contribution scheme, this actually represent changes in the pensions liability management process.

 

 

2.        Question 2: Hans Wijers bring to his role as a change agent

 

2.1    Introduction of change agent skills

 

A change agent is a person who has the clout, the conviction and charisma to make things happen and keep people engaged (Tschanz 2008, p.195). When talking about the application and management of change in the process improvement in the organizational change, James R. Persse (2006, p.92) summary several helpful change agent skills to help minimize a host of reactions that could include resistance, frustration, insecurity, doubt and smooth the way for the changes’ acceptance and adoption: Professional readiness, Open communications, Keep an ear for feedback, Active participation and Coaching and mentoring. In another classification, David W. Tschanz (2008, p.195) suggested that managing the kinds of changes encountered by and instituted within organizations requires an unusually broad and finely honed set of skills: Political skills, Analytical skills, People skills, System skills and Business skills.

 

2.2    Hans Wijers’ change agent skills

 

2.2.1            Active participation

 

Active participation refers to a situation where one engages extensively in sharing information with their partners and associates and seeks their advices and participation in the decision making process (Glasman & Nevo 1988, p.96). According to Jerry W. Gilley (2001, p.116), to a large extent a change agent’s successful change practice will depending on his or her degree of involvement which refers to a change agent’s willingness to care and feel responsible for the employees. Based on his view, acceptance and understanding are both passive while involvement implies actions and it represent active involvement into the employees’ problems and demands. The very hopefully such active participation will consolidate the relationship between the change agent and the employees.

 

In pharmaceuticals business division Hans Wijers focused on cutting cost to protect the margins and then replaced the management team and also trawled by the drugs pipeline to see if any held particular promise. We can see that by close observation and active participation, with professional judgments and knowledge Hans Wijers managed to identify the problems and chances in the said business sector. What is more, his open and inclusive character and actions also enhance his active participation into the change process and the closed relationship between the change agent and the subordinates who will implement the changes in detail.

 

2.2.2            Professional readiness

 

The term readiness refers to one’s degree of motivation, competence, experience and interest in accepting responsibility (Griffin & Moorhead 2008, p.353). And in term of professional readiness as a change agent skill, it is actually the change agent’s professional knowledge to make sure that the changes he or she proposes is professionally workable as there could be restrictions on the implementations of the changes from the professional perspective which make the changes impossible to be adopted and also it is the change agent’s professional skills in term of the mastery of the relative change model and procedures.

 

As in the case of Hans Wijers, when he became the chief executive bearing the hope to bring in changes to turn around the company, he was known for his deep knowledge of the business that the company was operating in. Such professional knowledge is critical for Hans Wijers as a change agent for the company for the following reasons:

 

First of all, Hans Wijers’s professional readiness enabled him to know well about the technological advantage of the company’s various products in the coming future and pick up those that could sustain the company’s future growth. One example is his decision to continue the business operations in the pharmaceuticals business division despite the internal and external pressure to cut the division off the company’s business coverage.

 

Secondly, Hans Wijers’s professional readiness made him able to pick up management team members who will have the professional skills and knowledge to continue the company’s strategy. One confirmation proof is his demonstrated right decision to replace the management team members in pharmaceuticals business division. Though the detailed replacement arrangements have not been mentioned in the case, it is no doubt that Hans Wijers needed to utilize his professional readiness to select the appropriate candidates with the professional skills needed to accomplish the tasks.

 

Thirdly, Hans Wijers owned strong professional skills in term of the mastery of the relative change models, theories and procedures. As mentioned in the case, Hans Wijers’ curriculum vitae made him perfectly suitable to the task of pushing forward changes. With the knowledge of management consultancy, he became minister for economic affairs in Netherlands government from 1994 to 1998 and he left the position because he was attracted by the real change and change of getting things done. His abundant experiences in management consultancy and politics together with his preference and acceptance of changes and getting changes done equipped him with necessary theories and experiences to become a professional change agent.

 

2.2.3            Diplomatic skills and open communications

 

While a certain set of skills will be necessary to develop a successful employee-change agent relationship, there are some of the same skills needed to be a successful leader and change agents, these skills include listening, negotiation and problem solving skills (Gilley 2001, p.216). For instance, throughout the relationship the change agents will serve as diplomats, this means that diplomatic skills and open communications will be critical to the change agent to maintain a successful employee-change agent relationship.

 

With the diplomatic skills that Hans Wijers had learnt from his five years experience in the Netherlands government, he managed to apply the political and diplomatic skills in the management of the shareholders’ expectations who had been angry with Akzo’s poor performance. And the communication with the shareholders was important and even critical as it comforted the shareholder’ angry and extreme emotions in time of slump of share price and made them believed that the company will soon go back to the healthy business track and earn money for them.

 

2.2.4            Political skills

 

Similar but still different from the diplomatic skills and various communication techniques, political skills are also necessary within the successful implementation of changes. As changes promoted by the change agents will in many cases be strategic changes as said above, these changes will alter the game, rules and original balance of power; according to John Storey (2009, p.124) it is a must that change agents are able and willing to use more sophisticated political skills which include an array of tactics such as image building, alliance formation, networking, and selling techniques. In other words, it is highly unlikely for a change agent to smooth the change process without the political skills required to sell, initiate, drive and deliver strategic organizational change.

 

Two kinds of facts showed that Hans Wijers had used his political in his proposed three year restructuring program which brought in strategic changes to the company with overall organization wide impacts. The first fact is that Hans Wijers replaced most of the management team members in the pharmaceuticals business division, and logically we can predict that the new management team members will of course more acceptable and supportive to his change program, this means that Hans Wijers in the beginning had expanded his alliance to reduce the resistance to the changes to be proposed; the second fact is Hans Wijers was very successful in selling his change scheme to the shareholders by managing their expectations to spare him some time to prove the viability of the scheme and the promising future of the company’s different businesses.

 

2.2.5            Problem solving skills

 

Problem solving is the key stone in the skills approach; together with performance they are considered as two major indicators to assess the leadership effectiveness (Northouse 2010, p.50) in the management of changes. Good problem solving involves creating solutions that are logical, effective, and unique and that go beyond given information (Zaccaro et al., 2000). Problem solving skills require a basic, logical understanding of the business and its operations so that the subordinates could do their part in moving the work forward and implement the changes as proposed (Falcone 2009, p.121).

 

Equipped with necessary theories and related experiences and diplomatic skills, Hans Wijers managed to be professional and successful change agent because of his additional problem solving skills. His problem solving skills could be seen the most directly by his decisive actions to stop the haemorrhaging money in pharmaceuticals business division by cutting cost and cutting off the non-core and loss making units and sold out these units to create substantial cash inflow to the company in the chemical division. Also he had a long term plan to revive the company’s business toward the track of making profits and growing the business.

3.        Question 3

 

3.1    Type of change implementation

 

3.1.1            Dunphy-Stace’s contingency model of change implementation

Table 1 Dunphy-Stace’s contingency model of change implementation

Source: Stace, D. & Dunphy, D. 2nd edition, Beyond the Boundaries, Australia: McGraw-Hill

 

One well known contingency model of change implementation was proposed by Dexter Dunphy and Doug Stace in their famous book named “Under New Management (Dunphy & Stace 1990). As seen from the table above, the Dunphy-Stace’s contingency model of change implementation divides the change into four types based the scale of change: Fine tuning, Incremental adjustment, Modular transformation and Corporate transformation. Fine tuning includes refining policies, developing people, adjusting processes; Incremental adjustment which is slightly larger than fine tuning can include correcting faulty processes, changing business emphasis, reallocating staff; Modular transformation takes an entire section of the business and re-think and re-build it, possibly in re-engineering way to be more efficient and maybe to re-direct it into new products or markets; Corporate transformation is larger again and involves major change that affects the whole company in which the entire management team will be replaced and functional departments could be combined and company could get involved into mergers or acquisition that change the whole company (Murray, Poole & Jones 2006). Based on different change types, the model proposes different type of change leadership and management to facilitate the different situations; the leadership styles identified in the model include Collaborative, Consultative, Directive and Coercive. Collaborative Leadership style involves widespread participation by employees in important decisions about the organization’s future, and about the means of bringing about organizational change; Consultative leadership style copes with consultation with staffs, majorly about the intention of introduce organizational change, with their possible limited involvement in target setting related to their field of expertise or duty; A directive approach is taken by a top management that personally makes all or many decisions (Dunphy & Stace 1988) which indicates a centralization in the decision making; Coercive leadership style is recommended in the model as the appropriate strategy for managing large scale discontinuous change. And as suggested by Dunphy and Stace, whilst there is a place for each strategy, there is absolute right selection to fit each situation with one best leadership and thus selection should be made and is of great importance (Andriopoulos & Dawson 2009, p.298).

 

The scale and style dimensions form a four by four contingency model which results in typology of four change strategies (Dunphy & Stace 1990, pp.81-82):

 

n  Participative evolution

n  Charismatic transformation

n  Forced evolution

n  Dictatorial transformation

 

3.1.2            Type of change implementation by Hans Wijers

 

In term of the type of change implementation, it should be concluded that the series of changes done by Hans Wijers indicate there had been a module transformation for the following reasons:


Figure 1 Incremental change

Source: Ayars, P. J. The Art of Leading Transformational Change. Bloomington: Author House, p.14

 

Firstly, the changes promoted by Hans Wijers when he became the chief executive of the company did not belong to incremental changes. As we known, Organizational Development (OD) theory holds that effective change could be treated as a series of small successive and orderly adjustments and as a process by which employees achieve progressive personal growth (Amado, G., Ambrose & Amato R. 2001, p.42). But the description and definition of the incremental changes is not in accordance with what had been done by Hans Wijers. As mentioned in the case, Hans Wijers brought in major changes in different business sectors which include cutting off non-core business process and performing merger and acquisitions, these changes are far away from incremental changes and they change the current business operations and thinking. Shown in the figure above when the basic thinking changes, incremental changes would not be able to be sustained because the fundamental has changed.

 

Secondly, the changes promoted by Hans Wijers are modular transformations rather than corporate transformations. Modular transformation involves major realignment of one or more departments or division while corporate transformation is corporate-wide and involves radical shifts in business strategy and revolutionary changes through out the whole organization (Etter 1995, p.298). As said above, different changes had been introduced in different business divisions and functional departments, though replacement of management team, mergers or acquisitions and adjustment of the strategic focus did happen but none of these changes was corporate-wide and involved radical shifts in business strategy and revolutionary changes through out the whole organization.

 

Based on the analysis we have above, it is safe to draw the conclusion that the changes performed by Hans Wijers were modular transformation which had implications for the identification of the most appropriate change leadership style and such implications will be elaborated as following.

 

3.2    Consequences for the most appropriate change leadership style

 

By identifying that Hans Wijers were implementing modular transformation during the first three year as the company’s chief executive, there are at least two major consequences and implications for the determination of the most appropriate change leadership style for Hans Wijers in this position.

 

First of all, collaborative and consultative leadership style would not be an option for Hans Wijers in order to perform the changes that he desired to propose. By referring back to the Dunphy-Stace’s contingency model of change implementation as shown in the figure above, when a change agent is going to perform modular transformations, he or she could not use a collaborative leadership style which encourage participation by employees in important decisions about the organization’s future as in most case, modular transformations would bring impacts on the interests of many of employees. And logically, it would not be possible for employees to make decision that could sacrifice their own interests. Also consultative style that has possible limited involvement in the goal setting would not be recommended in the case. As the company at that time was already in crisis, there is not time for consulting efforts to be done. What’s more the experiences that Hans Wijers in change management make such consulting work less necessary.

 

Secondly, it is recommended that Hans Wijers could use a mix of directive leadership style and coercive leadership. On one hand, directive leadership is the most effective leadership because it not only makes use of Hans Wijers formal legitimate power given to him in the position of chief executive of the company but also it provides directive guidelines to employees who could not find the right directions in the crisis situation; on the other, coercive style would also be necessary in some situations during the modular transformations. For example, Hans Wijers had to use a coercive way of leadership when the decision to keep the pharmaceutical business was resisted by many other employees and managers, it is necessary for Hans Wijers make up his mind and enforce the changes by coercive efforts.

Reference

 

Amado, G., Ambrose, A. & Amato R. 2001, The transitional approach to change. London: H. Karnac (Books) Ltd. p.42

 

Andriopoulos, C. & Dawson, P. 2009, Managing Change, Creativity and Innovation. London: SAGE Publications Ltd. p.298

 

Ayars, P. J. The Art of Leading Transformational Change. Bloomington: Author House, p.14

 

Dunphy, D. & Stace, D. 1990, Under New Management: Australian Organizations in Transition, Sydney: McGraw-Hill. pp.81-82

 

Dunphy, D. & Stace, D. 1988, Transformational and coercive strategies for planned organizational change: beyond the OD model. Organizational studies, 9: 317 – 334

 

Etter, B. 1995, Police leadership in Australasia. Annandale: The Federation Press. p.298

 

Falcone, P. 2009, One hundred and one tough conversations to have with employees. New York: AMACOM Books. p.121

 

Gilley, J. W. 2001, The manager as change agent: a practical guide for developing high-performance people and organizations. Cambridge, MA: Perseus Publishing. p.216

 

Glasman, N. S. & Nevo, D. 1988, Evaluation in decision making: the case of school administration. AH Dordrecht: Kluwer Academic Publishers. p.96

 

Griffin, R. W. & Moorhead, G. 2008, Organizational behavior. Mason: South – Western, Cengage Learning. p.353

 

Schmuck, R. A. & Miles, M. B. 1971, Organization development in school, Palo Alto, Cal.: National Press Books.

 

Storey, J. 2009, The Routledge companion to strategic human resource management. New York: Routledge. p.124

 

Szilagyi, A. D. & Wallace, M. J. 1987. Organizational behavior and performance. Business & Economics Press.

 

Leighbureau.com 2010. Alvin Toffler: PREEMINENT GLOBAL FORECASTER. [online]: http://www.leighbureau.com/speaker.asp?id=17

 

Murray, P., Poole, D., & Jones, G. 2006. Contemporary issues in management and organizational behavior. Mason: South – Western, Cengage Learning

 

Northouse, P. G. 2010, Leadership: Theory and Practice. California: SAGE Publications, Inc. p.50

 

Persse, J. R. 2006, Process Improvement Essentials: CMMI, Six SIGMA, and ISO 9001. Sebastopol, CA: O’Reilly Media, Inc. p.92

 

Shyni, K. V. K. 2005, Change Management Vis–Vis Human Resource Management. New Delhi: Discovery Publishing House. p.20

 

Stace, D. & Dunphy, D. 2nd edition, Beyond the Boundaries, Australia: McGraw-Hill

 

Tschanz, D. W. 2008, Microsoft Exchange server 2007 infrastructure design: a service-oriented approach. Indianapolis, Indiana: Wiley Publishing, Inc. p.195

 

Zaccaro, S. J., Mumford, M. D., Connelly, M. S., Marks, M. A. & Gilbert, J. A. 2000. Assessment of leader problem – solving capabilities. Leadership Quarterly, 11(1), 37 – 64



[1] The said Toffler’s model of depth of organizational intervention could not be found on the internet or any of Alvin Toffler’s books and articles.

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