In this paper, we will have a discussion based on the information from the case about the chief who helped paint Akzo out of a corner to discuss the changes brought by Hans Wijers and evaluate its depth, analyze the skills Hans Wijers used to implement the changes and identify the type of change implementation wrought by Wijers as well as the consequences.
Toffler’s model of depth of organizational intervention and the depth of intervention
i) Toffler’s model of depth of organizational intervention
As the American writer and futurist, Toffler was famous for his theory of three waves which discussed revaluation and changes in digital aspect, communication aspect, corporate aspect and technological aspect and so on. The famous three wave theory told us three periods for human history (Leighbureau 2010). In first wave refers to the agrarian revolution period and the culture of hunter-gatherer. In the second wave, it is during the period defined as industrial revolution period, in which the society is made up of nuclear families, education system marked by factory type and corporations and built on the basis of mass production, distribution, consumption and so on. The third wave refers to the present period we are in which is defined as the information age. (Leighbureau 2010)
As the time line of Wijers’ case belongs to the third wave period, we may regard it has some characteristics marked by the third wave period.
ii) The depth of intervention
In the third wave, Toffler (1989) told us there are six spheres including areas such as techno-sphere, socio-sphere, info-sphere, bio-sphere, power-sphere and psycho-sphere. And based on the third wave model from Toffler (1989) we can see the changes and revolution in the techno-sphere refers to the fields such as production system, distribution system, energy system and so on, which can help us better evaluate the depth of intervention of Wijers’ appointment as chairman to Akzo. Besides Toffler (1989)’s idea, Harrison (1970, pp.181-202) also helped us to better understand the concept of the depth of organizational intervention, it has a more concern with the depth of individual involvement especially their emotional involvement in the change process of an organization.
With the idea from Toffler (1989) and Harrison (1970, pp.181-202), we may define the depth of intervention of Wijers’ appointment as chairman to Akzo belongs to a moderate one.
In the first place, these changes wrought by Wijers such as cutting costs, replacing management team, developing new products, adjusting pension scheme and implementing a series of acquisitions were aimed to improve the effectiveness and efficiency in the areas of production system, distribution system, and energy system in Akzo rather than radically change its basic character. From this point we define the depth of this intervention as moderate one. In the next place, Harrison (1970, pp.181-202) mentioned that with the increasing of the depth of intervention, the depth of many concomitants will also increase such as the competitiveness of change agent, cost, centrality of the individual and so on. From the case, although Wijers replaced the management team which wasn’t seemed to involve many lay off issues and too much fresh blood in Akzo and there were a series of acquisitions which was reasonable under financial and material capabilities of Akzo, all of these changes brought by Wijers after his appointment as the CEO of Akzo may belong to a relatively modest intervention in the degree of cost, his competitiveness and centrality of the individual.
In short, from the above discussion, we regard the depth of intervention of Wijers’ appointment as chairman to Akzo belongs to a moderate one.
Changes that Wijers has made and evaluation
According to information from the case, we can conclude that there are about five major changes brought by Wijers including cutting cost, replacing management team, developing new products, adjusting pension scheme and implementing acquisitions.
In term of cost cut, this decision made was on the current situation of some business divisions in Akzo which were seemed to be weak and lack of competitiveness and resulted in the money loss. These divisions such as chemicals and coating and pharmaceutical division all have such kind of problem. So the initial change made by Wijers in Akzo was to cut cost in these divisions in order to protect the margins.
When come to the change in replacing management team by Wijers, we can get the following. In the first aspect, as we can get shareholders were angry with Akzo’s performance before the change, which was summarized by Wijers as the ineffective communication in the corporate and mismanagement of the original management team. In the second aspect, Wijers had found that there were many outstanding people in Akzo who were eager to changes, most of whom owned good knowledge and skills on the business of Akzo involving in. because of the motivation from the two aspects, Wijers had replaced the old management team and appealed some talents to facilitate him carrying out the restructuring program in Akzo.
The next change referred to new products development. In fact, we can see although the antidepressant drug Japirone was Akzo’s most promising selling point, there was no alternative blockbuster drugs for Akzo to maintain its reputation and status in the market besides Japirone. And moreover, the decline trend of the chemicals industry also required Akzo to develop diversified products to further fulfill the need of market. That became the reason for Wijers to lead Akzo to develop new products in the filed of chemical industry. And the good performance of the new products such as the asenapine an antipsychotic drug and a fertility treatment proved the wise decision of Wijers.
After that, Wijers adjusted the pension scheme, moving from a final salary to a defined contribution scheme. The reason behind this change was because the big pension deficit of nearly $ 3 billion, which led Akzo to operate like a pension fund rather than an international business. To make the pension scheme work more effectively and properly to assist Akzo’s business in the global market, Wijers carried out this adjustment.
The lat change made by Wijers was to implement acquisitions. There were two major factors contributing to this change. The first one was that the core business region of Akzo was defined as in the coating industry aspect. The second one was that the expectation of the future developing road its coating business was oriented at the Asian market. So a series of targeted acquisitions were carried out via the assistance of investment in the coating division of Akzo.
Palmer, Dunford and Akin (2009) told us that strategic change is the change to transform the content of an organization’s strategy including its scope, resource allocation, competitive advantages and so on, which is aimed to meet pressures and challenges by the current situation of the organization and its external environment. Based on this definition and concept, we may define these changed brought by Wijers in Akzo as the strategic change.
At first, the current situation of Akzo when Wijers was just appointed as its CEO was in a dilemma. For example, there was a pension deficit at $ 3 billion, high costs in some business division, low competitiveness of its products and so on, which required Akzo to improve its product competitiveness, properly allocate its resources such as how to allocate money in the pension scheme and adjust its some of its business orientation. Secondly, the external environment including the decline trend in chemical industry, great market potential in Asian region especially in Chinese market and so on all called for a strategic change to adjust its business scope and resource distribution scheme and so on.
And from two aspects, Wijers implemented many changes as we discussed above, which were to make adjustment of its resource allocation such as the change in pension scheme and acquisitions, make modification in its business scope such as its expansion in Asian market and concentrating on the coating industry rather than other aspects and improve its competitiveness such as the product diversified change. And based on the view from Palmer, Dunford and Akin (2009), we can regard these changes brought by Wijers as strategic change.
As a change agent, critically discuss the skills Wijers bring to his role
i) Change agent
According to Daft (2008), in the filed of business, a change agent often refers to the person who is appointed to carry out organizational changes for an organization. Based on the role and activities practised by Wijers in the case, we can define him as the change agent for Akzo to facilitate its organizational change. And furthermore, we can regard him as the internal change agent who was work inside the organization and had his own position in this organization besides the role as a change agent rather than invited by Akzo from outside to assist its organizational change (Bolman & Deal 2003).
Daft (2010) reminded us that the job for a change agent is relatively complex and multidimensional, which requires a range of skills including conceptual skills, human skills and technical skills. From this point of view and information from the case, we are able to define these skills used by Wijers as an internal change agent to lead the organizational change in Akzo including the three types of skills.
Conceptual skill is regard as the cognitive ability to see the organization as a whole entire system and the relation among its parts (Beardwell& Claydon 2010). In terms of this kind of skill, Wijers mastered it as well as the internal change agent. At first, he owned a very sharp insight on which parts of the business of Akzo was properly functioning and which parts of the business Akzo in may be lack of competitiveness. For example, the immediate focus after his appointment was on the pharmaceuticals side. His rich life and working experience endowed him with the conceptual skills to observe and analyze Akzo as an entire body that the improper function of pharmaceuticals side lagged the healthy development of Akzo and hemorrhaged its money.
Secondly, the conceptual skill owned by Wijers enabled him to have the helicopter perspectives to take immediately action to adjust the pension scheme and orient its focus on coating business as well as expand its business into the Asian market with great potential (Osborne 2002) .
Thirdly, the experience of working in government also improved his conceptual skill which made him act in interest of the overall situation of Akzo. The sensitive political awareness from conceptual skill made him understanding the importance of coalitions to facilitate him to fulfill Akzo’s organizational change (Osborne 2002). Due to this, we may infer that another reason for Wijers to replace the old management team besides its ineffective operation was that it was necessary for him to establish a coalition based on the upper management teams in Akzo to win a full support and minimize the resistance to change from the management level of Akzo. This kind of skill assisted him to implement the organizational change in Akzo more easily, which was also valued by us.
Daft (2010) told us human skills are the ability for the change agent to work with and through other people and to work effectively as a group member. At first, Wijers demonstrated this kind of skill in the ways for him to motivate, facilitate, coordinate, lead, communicate as well as resolve conflicts related with people in Akzo (Daft 2010). For example, one type of the human skills he demonstrated was regarded as the diplomatic skill learned from politics enable him to be very skillful in persuading and mollifying people to establish and maintain proper contacts with him in the organization. The story between him and angry shareholder was such kind of example that Wijers via the help of excellent diplomatic skill to mollify these angry shareholders and gain their support toward these organizational change brought by him.
And then, the outstanding communicate interpersonal skills from human skills made Wijers have the insight and ability to select, listen, collect correct information, identify people’s major concerns as well as manage these people (Barnlund 2008; Daft 2010). The successful appealing many potential talents to work together toward the organizational change was the proof of this skill. According to the case, Wijers was very skillful in collecting proper information such as there are many people in Akzo who are yearn for change and have good knowledge on the operation of this organization. Meanwhile, he was also skillful managing people that he successfully appeals staff with good knowledge of the business of Akzo to assist the organizational change.
Moreover, the excellent human skills used by Wijers in the organizational change included the networking and influencing skills that enable him to gain and maintain commitment towards forthcoming plans and ideas (Leopold, Harris & Watson 2005). The example that Wijers gained the agreement from the Dutch unions to adjust the old pension scheme as a final salary to a new one as a defined contribution scheme was the evidence of his ability. In the case, we got that Wijers made use of a deal with the Dutch unions to win their agreement on the new pension scheme. Although we have no idea on the detailed information of such deal, we can observe his skill and ability in collecting correct information and identify people’ major concerns or else this deal offered by him may not act so well to gain the agreement from the Dutch unions.
The last kind of skill used by Wijers belonged to technical skills which is the ability to understanding and proficiency in the performance of specific tasks (Daft 2010). Such kind of skill was also demonstrated by Wijers in the organizational change of Akzo thoroughly. In the first place, Wijers masters the skill as analytical ability that he made deliberate analysis on the market situation for Akzo. For example, he realized the big market potential in Asian region especially in Chinese market that he carried out a series of targeted acquisitions for Akzo’s coating division so as to better reach into the Asian markets which had been enjoying a fast growth.
In the next place, the other technical skill used by Wijers was the capability to use tools and techniques to solve problems (Daft 2010). This skill assisted Wijers to carry out the a diversified product development strategy on the chemical division via the support from developed techniques to product two new blockbuster drugs including asenapine as a antipsychotic drug and a fertility treatment to assist Akzo meet challenges and fulfill requirements from the market besides the already gained market share from Japirone for Akzo.
And more, another technical skill used by Wijers may also be regarded as professional finance management skill (Daft 2010). For example, under the lead of Wijers, Akzo had carried out a serious of targeted acquisitions to support the development of its coating industry. As we all know, the success of a series of targeted acquisitions needed the support from great investment namely a great sum investment of money. That the financial situation which Akzo was in at that time may be not so good based on the information from the case, but Wijers still enforced the acquisition which was aimed to motivate a paint sales growth from $ 650 million to $ 1 billion at the expense of money investing in these acquisitions. The deliberate analysis on the income and expense on the acquisitions disclosed this kind of technical skill owned by Wijers for us in the organizational change period.
In brief, these skills used by Wijers as an internal change agent in Akzo’s organizational change period did contribute a lot.
Dunphy-Stace’s contingency model, Wijers’ type of change implementation and consequences
We’ll have a further discussion on the type of change implementation made by Wijers and the consequences via Dunphy-Stace’s contingency model of change implementation.
- Dunphy-Stace’s contingency model
In terms of organizational change, the contingency model proposed by Dunphy and Stace (2002) may be one of the most famous one, which argued the view that the change style often depend on the change scale and the receptivity of organizational members for involvement in the change. In their model, there are two focusing points including the style of change such as collaborative style, consultative style, directive style and coercive style as well as the scale of the change such as fine-tuning, incremental adjustment, modular transformation and corporate transformation (Dunphy. n.d.) shown in figure 1.0.
Figure 1.0 Dunphy-Stace’s contingency model of change
Source: Stace, D. & Dunphy, D. C. 2002, Beyond the Boundaries: Leading and re-creating the successful enterprise, 2nd edn, McGraw-Hill, Australia,
In the aspect of change scale, from fine tuning scale to corporate transformation scale, the changing scale is gradually increasing. For example, fine tuning scale is to make some small modification and adjustment, incremental adjustment may requires a larger scale than fine tuning in the organizational management, structures and strategies, modular transformation has a more systematic and dimension of change scale compared the former two and the corporate transformation may be the largest one companied by some racial changes (Shyni 2005).
And then in the aspect of change style, it refers to the cooperation level and involvement level of both employees and leaders in organizational change and the degree of employee’s cooperation is decreasing as well as the involvement of leaders is increasing from the collaborative style to corrective style (Menkhoff, Chay & Loh 2002).
And built on the basis of the two aspects, the type of change implementation has four types including participative evolution, charismatic transformation, forced evaluation and dictatorial transformation with have difference in the level of urgency for change and resistance respectively. In Table, 1.0, we can get that participative evolution has a low level both in urgency and resistance to change. Forced evaluation has a low level in urgency of change but a high level in resistance to change. Charismatic transformation enjoys a high urgency of change but low resistance to change compared with both high levels in urgency of change and resistance to change from Didactorial transformation. (Menkhoff & Wah 2005)
Table 1.0 Appropriate change leadership styles for organizational change
Low urgency of change/ Low resistance to change
Low urgency of change/ High resistance to change
High urgency of change/ Low resistance to change
High urgency of change/ High resistance to change
Source: Menkhoff, T. & Wah, C. Y. 2005, Change leadership in small enterprises: Evidence from Singapore, International Small Business,
ii) Wijers’ type of change implementation
Reasons for implementation the didactorial transformation
From the above investigation into Dunphy-Stace’s contingency model, we can further get the conclusion on Wijers’ type of change implementation that Wijers adopted the didactorial transformation.
In terms of the urgency of change in Akzo we can get it is high. Let’s have a look at these evidences. At first, there were a number of problems faced by Akzo when Wijers appointed as CEO including a pension deficit about $ 3 billion, high costs in divisions such as chemicals and coating, single blockbusters product in chemical industry aspect, old management team lacking in vitality and a decline in its stock and so on. Besides these internal pressures, the outside environment including the market downturn situation in the chemical industry and furious competition from many competitors resulting in the marketing units losing contribute to a big pressure fro Akzo to make some proper adjustment as well. Roughly speaking, the environment both internal and external calls for urgency for Akzo to change.
Taking about the resistance level to change in Akzo, we may regard it as a high level. At first, we may suppose the old management team may resist the change radically or else Wijers may not have to replace the entire management team with new members who are eager to change. Secondly, the resistance from Dutch union may be seemed radical as well. From the case we may infer that just because of the resistance to change especially to the pension scheme modification, Wijers had to brokering a deal with the Dutch union to gain its agreement on change.
The two factors that high level in urgency of change from environment pressures and high level of resistance to change made Wijers adopt the didactorial transformation to implement the organizational change.
Implementation of didactorial transformation
In addition to the above discussion, we can infer that the style of change management of Wijers belonged to the directive to coercive dimension. The scope of his change may be defined as a modular transformation, because the realignment and restructuring depth of the organizational change in Akzo was relatively wide (Buchanan & Huczynski1997). For example, the fully replacing management team was one of the evidence. And the business reorientation on the Asian market which Akzo may not touch before was another evidence. And the adjustment in the pension scheme from a final salary to a defined contribution scheme was also a new trial for Akzo. The three kinds of change wrought by Wijers were all the modular changes.
Briefly speaking, both the style of change management and scale of change implemented by Wijers in Akzo indicated that type of change implementation made by Wijers was the didactorial transformation.
To Akzo, the didactorial transformation implemented by Wijers may be the most appropriate one according to its current situation at that time that the urgent level for change was relatively high and the resistance to change was relatively high as well. And these changes made by Wijers proved to be relatively successful later which may result from the appropriate change leadership style.
The first positive consequence of the change leadership style was the good performance of its diversified product development strategy. As we all know Wijers had pushed forward the strategy and due to this Akzo has owned another two blockbuster drugs besides the famous anti-depression drug Japirone. The wise decision of product developing strategy made Akzo not only get approval in both the US and European market, but also great profit.
The second good consequence was the market expansion. For example, a series of acquisitions was aimed to facilitate the coating division of Akzo to expand to Asian market. With the properly management, there was an optimistic paint sales predict for Akzo in the Asian region from $ 650 million to $ 1 billion by 2010.
The third positive consequence was the readiness preparation for Akzo to be an international company. The adjustment in pension scheme was a good example. With a proper negotiation with Dutch Unions, Wijers helped Akzo to transform from a pension fund operation organization alike to an international business organization alike.
At last, the turnover of Akzo in July even raised by 7% and the operating profit increased by 9%.
In short, all of these financial data and performance evidences disclosed that the appropriate change leadership style not contribute to the great economic income for Akzo, its shareholders and employees but also expand the market and gain more consumers as well as maintain a good image in the international market, which was relatively successful.
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