The Change Process - DiVA portal1290/FULLTEXT01.pdf · The Change Process An Insight in...

The Change Process

An Insight in Transformational Leader‘s

Competencies

Authors: Mark Tonny Kirumira

Tutor:

Co-Tutor:

Dr. Philippe Daudi

Dr. Mikael Lundgren

Program: Master´s Programme in

Leadership and Management

in International Contex

Subject: Change Management

Level and semester: Master Level, June 2008

Baltic Business School, University of Kalmar. Sweden

The Change Process:

An Insight in Transformational Leader’s Competencies

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Acknowledgments

I would hereby take this opportunity to thank the people who have rendered great help and

support in writing this thesis research. Being part of this Masters Programme has been valuable

both in my life experience and the way forward towards my future. I would therefore like to

take this opportunity to thank the people who have contributed to this memorable learning

period.

Many thanks go to Professor Philippe Daudi, head of the Programme, for his precious advices

and innovativeness through the whole process of my research.

Dr. Mikael Lundgren and Professors Bertil Hultén for their positive support, and tireless work

upon guiding my thesis. I am very grateful to them.

I would also like to thank Terese Johansson for her tactful and essential contribution towards

this thesis and the Programme.

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Abstract

Purpose — this thesis aims at finding out the extent to which transformational leaders exercise

the required competencies during the process of change within an organization. It‘s simply

meant to highlight the pros and cons that are evidenced within transformational leaders during

the change process.

Design/ methodology/approach — the thesis relies on two cases involving mergers, notably

HP-Compaq merger, and Volvo-Renault merger are used for the analysis. The reliance on

models and concepts is employed, to test the empirical findings.

Findings — this paper illustrates that although transformational leaders competently fulfil

their, there is a certain level of incompetence that arise during the process of change.

Originality/Value — this paper provides a detailed analysis of the transformational leader‘s

virtue and short comings during the process of change.

Article type — Research Paper.

Keyword(s) — Transformational leadership- Change- Merger- Competence- Resistance

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Table of Contents

1. INTRODUCTION .......................................................................................................................................... 1

1.1. THE LEADERSHIP PUZZLE ............................................................................................................................... 2 1.2. THE INTRODUCTORY LEADERSHIP DEFINITION ............................................................................................... 3 1.3. BACK GROUND TO THE RESEARCH ISSUE ....................................................................................................... 3

1.3.1. The research’s guiding question ........................................................................................................... 4 1.4. THE OBJECTIVE AND PURPOSE OF THE RESEARCH .................................................................................... 5

2. THE RESEARCH METHODOLOGY APPROACH ................................................................................. 7

2.1. QUALITATIVE RESEARCH OVERVIEW ............................................................................................................. 7 2.2. THE GROUNDED THEORY APPROACH.............................................................................................................. 8 2.3. THE APPROPRIATE RESEARCH STRATEGY AND DESIGN................................................................................... 9

2.3.1. The motivational factor behind the choice of the selected merger cases .............................................. 10

3. THEORETICAL FRAMEWORK .............................................................................................................. 11

3.1. THE MAJOR LITERATURE TO BE USED ........................................................................................................... 11 3.2. LEADERSHIP CONCEPTS AND THEORIES ....................................................................................................... 12

3.2.1. Peter. F. Drucker on leadership ......................................................................................................... 12 3.2.2. John Adair on leadership ................................................................................................................... 13 3.2.3. The leadership theories ...................................................................................................................... 14

3.3. THE DIFFERENT LEADERSHIP STYLES ........................................................................................................... 16 3.3.1. Authoritarian/ Autocratic leadership ................................................................................................. 16 3.3.2. Participative/ Democratic leadership................................................................................................. 16 3.3.3. Delegate /Laissez-Fair leadership ...................................................................................................... 16

3.4. TRANSFORMATIONAL LEADERSHIP .............................................................................................................. 17 3.4.1. The transformational leadership description ..................................................................................... 17 3.4.2. The definition of transformational leadership .................................................................................... 18 3.4.3. Transformational leadership and charisma ....................................................................................... 19 3.4.4. The transformational leadership model .............................................................................................. 20 3.4.5. Transformational leadership and self-efficacy ................................................................................... 21 3.4.6. Transformational leadership, cohesiveness, performance and commitment ...................................... 21

3.5. THE CHANGE PROCESS ................................................................................................................................. 23 3.5.1. Introduction ........................................................................................................................................ 23 3.5.2. The different types of organizational change ..................................................................................... 24 3.5.3. The Business Process Re-engineering (BPR) ..................................................................................... 26 3.5.4. Steps that are a real test of competence ............................................................................................. 27 3.5.5. Models of organizational change ....................................................................................................... 28 3.5.6. The Burke-Litwin model ..................................................................................................................... 28 3.5.7. The implementation process in particular .......................................................................................... 30

3.6. THE SENSE MAKING PROCESS ....................................................................................................................... 33 3.6.1 Introduction ......................................................................................................................................... 33 3.6.2. An insight into the sense making process ........................................................................................... 34 3.6.3. Enactment, organizing, and sense making relationships .................................................................... 35 3.6.4. Organized sense making through communication .............................................................................. 36

3.7. THE EFFECT OF CULTURE IN THE CHANGE PROCESS ..................................................................................... 37 3.7.1. Introduction ........................................................................................................................................ 37 3.7.2. The definition of culture ..................................................................................................................... 37 3.7.3. The famous Geert Hofstede´s cultural dimensions ............................................................................. 38

4. THE CONCEPTUAL FRAME WORK ..................................................................................................... 41

5. THE EMPIRICAL FRAMEWORK AND FINDINGS ............................................................................. 44

5.1. THE GUIDING CASES TO THE RESEARCH ....................................................................................................... 44 5.1.1. Hewlett Packard and Compaq merger case ....................................................................................... 44 5.1.2. The Volvo and Renault merger case ................................................................................................... 46

5.2. CASE ANALYSIS AND FINDINGS .................................................................................................................... 49 5.2.1. The basis for motivation to carry out change processes ..................................................................... 49

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5.2.2. An overview of transformational leadership in due course of the merger .......................................... 51 5.2.3. An insight on organizational sense making as a roadmap towards implementing change ............. 53 5.2.4. The decision making paradox in a democratic set up......................................................................... 55 5.2.5. Proponent’s desire to un- scratchily walk the talk of change ............................................................. 57 5.2.6. Calls for transformation as a precursor to resistance ........................................................................ 59 5.2.7. Resistance as depicted from the cultural perspective ......................................................................... 62

6. CONCLUSION AND VISION .................................................................................................................... 67

6.1. THE RESEARCH CONCLUSION ....................................................................................................................... 67 6.2. THE VISION FOR FUTURE RESEARCH............................................................................................................. 68

BIBLIOGRAPHY .................................................................................................................................................. 70

APPENDIX .............................................................................................................................................................. A

THE UNIVERSITY OF KALMAR ...................................................................................................................... A

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1. INTRODUCTION

Leadership is associated and clustered with various meanings that create a very understandable

sense of interest (Burlingame, 2007). The evolvement of leadership as a term came up during

the 19th

century, making way to the creation of a multiplicity of terms and definitions that

many scholars have and will research about in the future (Ibid).

Enormously centred in this thesis research, is transformational leadership‘s role during

the process of change. As far as I am concerned, the challenges that are faced by the leaders of

today are quite many, positioning them on the verge of pulling out all the necessary and

required strategies in order to get things done in the right way. As all such developments

unfold though, the search of greener pastures such as competitiveness, organizations begin the

process of expanding in different countries, territories, as well as unprecedented positions

hence coming face to face with the challenges/barriers through which if overcome, it would be

an achievement.

The way I view the pending developments is that the testing period for transformational

leaders will always bear the theme; survival for the fittest simply because the ways in which

transformational leaders behave towards the very challenging need of having, and employing

the required competencies within the ever competitive and changing business world, is always

a daunting task. The onus is on these leaders to go an extra mile. As a matter of fact as far as I

know, no leader would be amused at being labelled the lame duck. It should therefore be noted

that any organization or business that enjoys the fruitful periods of possessing the most dreamt

about competent leaders/work force would by any means survive the competition, become

profitable, and even think about expanding in strategic positions.

In the sense of envisaging the developing events, the process of surpassing the expected

results may seem far-fetched for organizations and businesses that posses incompetent leaders.

Although not all businesses/ organizations that employ below par leaders/employees fail, the

effects may be felt in the long run, for the chances are high that the scenario may lead to the

creation of other un-wanted circumstances such as low productivity, tensions, losses,

redundancies, exploitation, liquidation, expulsions etc, which is definitely un-welcome news

for the organization and its stake holders. So theoretically, transformational leaders should

have the best qualities to run the show, with a challenge of playing a big role with an aim of

doing the right thing from the start.

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1.1. The leadership puzzle

Since leadership has very many meanings, some degree of confusion is always created when

trying to derive it in various contexts (Northouse, 2004). For example, we may talk about

leading a meeting, a discussion, a market, or rather a tour. In order to clearly understand the

meaning of leadership, we need to sort out the confusions that arise while contextualizing

leadership. For instance, when we talk about leading a meeting, the meaning of leadership is

depicted from the chairperson or some one who facilitates it. As regards leading a tour, a closer

look is given to the tour guide. But in stark contrast from the above two meanings, leading a

market may have a leader in a very real sense as the top player. This indicates that leaders

should have qualities that may not be easily possessed by other players/ leaders.

Most researchers and authors on leadership (Bennis and Nanus, 1985) focus on what it

means to be a leader as in the context of being at the top of a group hierarchy, the CEO,

President, Chief, King, team leader, Managing Director, etc. As a result, individuals tend to

overlook the uses of the term, for whatever else we say about leadership, every usage focuses

on one person as a central figure. As a result, that person moves us to do things we would not

do otherwise. So, this being said and done, the biggest question and test to be put ahead of us is

whether we can define leadership or a leader as whatever moves or influences us as individuals

(Northouse, 2004). In general, such definition is too all-inclusive. A good explanation to this

fact is that according to Northouse, individuals may not want to think of teachers, sales people

or our uncles and aunties as leaders just because they succeed in persuading us to do our home

work, buy something or watch some educative programmes on television respectively. All this

is because leadership is a group function, involving a player who succeeds in bringing people

together for a common purpose (Northouse, 2004).

“And you know my friends, there comes a time when people get tired of being trampled

over by the iron feet of oppression, there comes a time when people get tired of being

pushed out of the glittering sunlight of life’s July, and left standing amidst the chill of

an Alpine November. We are here because we are tired now.” Dr Martin Luther King

(Gardner, 1995: 206).

From the above quotation, a leader such as Martin Luther King perfectly fits the bill because he

used all the necessary rhetoric to appeal to all the people in order to realize an urgent need.

Similar is Mahatma Ghandi who was so competent in calmly convincing his followers to

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protest peacefully, and refrain from fighting and violence against their adversaries (Gardner,

1995: 268-284).

1.2. The introductory leadership definition

Several authors have defined leadership in many different ways, but each definition has a

meaning that is being drawn against the background of the existing situation. As it will be

discussed later on in this research, there are many definitions that will be reflected upon.

The reflection of my introductory leadership definition will be depicted from one of the

most interesting literature. According to Warren Bennis, leadership is a function of knowing

your self, having a vision that is well communicated, building trust among colleagues, and

taking effective action to realize your own leadership potential (Bennis, 2003). At first, I would

however view such a definition as one that outlines some of the many various traits that a

leader should have in order to be able to lead and have followers that are loyal. But having had

a closer look at it, Bennis outlines exactly what good leaders have in abundance, within this

modern day era.

1.3. Back ground to the research issue

This thesis research is aimed at finding out whether transformational leaders have the required

competencies as of when the process of change is taking place. In short terms, this puts the

leaders in a spot light for the need of finding out if they do their job in a proper manner and if

not, the examining of any other circumstances that could be playing a role towards their

failures. Within this modern dog eat dog /competitive business world, businesses usually

expand in new territories that are quite very un-familiar. These expansions though, take place

on different grounds that range from mergers and acquisitions, globalization, knowledge

transfer, alliances, outsourcing, technology advancements, and many more circumstances. Not

only stopping at that, these changes may also lead to the creation of needs and requirements

that out rightly need to be addressed whenever they surface. As Northouse argues, the need for

survival or have a huge cake on the market share while using low costs of production/ services,

are a challenge to the transformational leaders, hence putting them in position to do every thing

possible within their reach and capacity in order to prevent any business slack (Northouse,

2004).

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As a matter of reflection, businesses are driven by factors such as the political, social,

economic, legal, and technological. One example is that when all these factors are constant,

and a new low cost business is expanded in a foreign country, its only survival hopes hinges on

either outsourcing or employing the cheap local people. The resulting circumstances for such a

business will be resorting to getting competent work force, with an option of applying the

expensive strategy of outsourcing. On the other side, is the HP-Compaq merger case that as it

will be noted later in this study, was not easy to apply changes without affecting the corporate

culture that may be strongly embedded in some people‘s values and beliefs.

The research issue in question culminates from the many problems that have occurred

during the honey moon period of different organizations and companies. While many of such

profitable businesses have had a lot of successful situations to talk about, there have been

situations where failures in realizing the dream have not gone un-noticed. Many of such

situations have recently been as a result of Western and Asian businesses being shifted

overseas, under the umbrella of aiming at low production costs, low taxes, and cheap labour.

Nevertheless, we have seen them in ventures such as mergers and alliances. The resulting

factors from such change situations range from business losses, redundancies, expulsions, lost

contracts, economic weaknesses, cultural backlashes, and political failures.

Bruner and Spekman argue that the rise in some of the above problems may be

attributed to leaders since they are the decision makers, needed when a business needs to

survive and succeed in a very competitive business world (Bruner and Spekman, 1998). And

since change has always been happening within different cultural settings (corporate and

traditional), transformational leadership has been in the spot light for the reasons that would

make the whole process of change a success.

1.3.1. The research’s guiding question

Basing on the research issue of having a close look at transformational leadership during the

process of change, I have realized that there are quite a big number of effects that arise due to

this process. These however depend on the circumstances that prevail as of when the change

process is taking place, which is tantamount to saying that different research problems may

arise from different situations within the organization.

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To what extent do transformational leaders show the required competencies during

the process of change?

The research question below will be used to give a reflection on how to analyse the

existing problem that occurs during the process of change.

1.4. The objective and purpose of the research

“I learned the value of hard work by working hard” - M. Mead

The focus on transformational leadership during the change process in this thesis project

creates a lot of interest for the fact that for its part, transformational leadership challenges any

road blocks that gets into change‘s way. Theoretically the notion that transformational

leadership challenges the existing status quo is true and realistic because as leaders get to the

point of implementation of the set strategies, one thing that is always on their minds is to do

away with the old structures, hence embracing a paradigm shift in different organizational

sections. A point that would be under trial in this thesis research is to envisage whether such a

theoretical notion would prove the practical implications as relevant.

During the periods of study about leadership, I have had a realization that on its part, it

entails grasping all the necessary skills and techniques that are necessary for application with

an aim of achieving the objectives of a group. This being said and done, leaders that achieve

such milestones with all the confidence and courage are deemed to be exceptional and

successful. According to Bennis and Nanus, the vision of the leader in an organization is quite

important when making revolutionary changes, for leaders have an initiative to motivate the

followers through communicating the organization‘s vision (Bennis and Nanus, 1985).

Perfection in what leaders outline to their followers is something that is realistically not easy to

achieve though, due to the fact that in one way or another, however much there is success that

looms around the organization there will always be some leadership dark spots to be wiped out.

For that matter, I am optimistic that the highlights and hints on how leaders proceed in that

direction would be of great use for future research.

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According to Solow, the role of innovation within the process of change deservedly

bears recognition due to its role in inspiring followers. Solow further reiterates that successful

change processes therefore, are a lesson to many more business owners and practitioners within

the field of research (Solow, 1957). Innovation is enormously influential to the development of

economic growth, welfare, and change. Nevertheless, future prosperity of an economy

crucially depends on its success in promoting technological progress (Ibid). On its part, I hope

this study will highlight how innovation can be of importance for any competitive positioning,

as well as an initiation for competence.

In addition to all the above, I would be glad if this research would logically contribute,

as well as being of an added value to the business world of fellow researchers, practitioners,

future managers, etc. In this ever changing and unpredicted world, human beings face many

situations that all of a sudden come into existence during the process of change. Not until some

one realizes a certain problem/issue, and then addresses it to the rest of the world, we may not

be attentive of a certain occurrence/ phenomenon.

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2. THE RESEARCH METHODOLOGY APPROACH

“By using the literature, the researchers should find a balance

between their own creativity and the existing knowledge about their

research topic.”

(Straus and Corbin, 1990: 45)

Methodology, as far as I am concerned is a very important area in any research that is being

carried out. The research methodology and design that I will use to explore the problem will be

well explained here under, since it is well known that the methods for collecting information

play a big role in the empirical findings of the research.

For that matter, the decision of whether to choose a quantitative or a qualitative design

entirely depends upon the nature of the realized problem/ issue. And in order to draw good

empirical conclusions for this research, the adequacy of the design will further hinge upon the

type of information needed, the context of the study, and the availability of recourses (time,

money, and human). In order to shade some light upon the initial circumstances of this

research, I had first opted for a broader qualitative research approach. But due to time

resources, I couldn‘t get a timely response to the interview request letters from the contacted

would-be respondents. Knowing that urgency was much needed therefore, a decision was made

in favour of selecting some cases from which there was a rich availability of secondary sources

such as articles, books, journals, websites, document analysis, etc.

2.1. Qualitative research overview

Qualitative research has a purpose of getting a deeper understanding of the

phenomenon, consequently going deeper than quantitative research. It is believed that

closeness to the source of information is a characteristic of qualitative research, and hence

basic data gathering techniques are observations, interviews, and document analysis (Walcott,

1999), which gathered information is usually in form of words or sentences. To have a clearer

look, qualitative research is the collecting, analyzing, and interpreting data by observing what

people do and say.

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The qualitative approach can refer to research about persons‘ lives, stories, behaviour,

but also about organizational functioning, social movements, or interaction relationships

(Strauss and Corbin, 1990). Having chosen the qualitative method and the nature of

information and literature at my disposal, I decided to use the guidance of grounded theory in

order to get to the empirical findings.

This research is aimed at envisaging how transformational leaders react during the

change process, by getting to know whether they are competent with what they do. In the stated

context, the use of experiments; archival analysis and history would be inappropriate methods.

Nevertheless, the most appropriate methods as regards the research issue would therefore be

the use of surveys and case studies. Looking at how events will unfold and the type of cases at

my disposal, the inappropriateness of the use of surveys leaves me with the choice of case

studies. This being said, I would like to clarify that I will use both case studies from

organizations where past events in leadership have already been researched about but where

leadership forms are still effective to date.

2.2. The grounded theory approach

According to Strauss and Corbin, Grounded Theory is the process of discovering and

generating theory. In their extensive research work, the authors clarified that the grounded

theory method is used to approach research, and later generate theory from the observed data.

The authors argue that the ability to recognize what is important in data and give it meaning

will practically be an out come of enhancing my theoretical sensitivity in correspondence to my

own research process (Strauss and Corbin, 1990). In their interesting work, Strauss and Corbin

relate grounded theory to qualitative research through defining it as a qualitative research

method that uses a systematised set of procedures to develop and inductively derive grounded

theory about the phenomenon. The researchers use the qualitative data collected in order to

define their own theory, which would be grounded in data later on.

In relating this thesis research to grounded theory, the managerial perspective of this

study engages the research process in moving from the specific to the more inductive/general

perspective, a result that would make an empirical observation as a comparison to the literature

knowledge. Within the grounded theory for that matter, data collection, analysis as well as

theory stand in reciprocal relationship with one another. This means that the process is

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continually progressive and open; hence theory should progressively emerge from the data

(Strauss and Corbin, 1990: 23).

Depicted from my understanding of Strauss and Corbin, my motivation for using the

grounded theory approach is rooted from the fact that as one of its main objectives grounded

theory will be in position to create a trustworthy theory that would show some indications

about the research area. That is the one reason I have a belief that the empirical frame work and

analysis may be one of the most important areas that profits from grounded theory in this

research, for I would build own theory and analyses, as depicted from meaning within the

theoretical frame.

2.3. The appropriate research strategy and design

Flyvbjerg (2006) suggests that rather than using large samples and following a rigid protocol to

examine a limited number of variables, case study methods involve an in-depth, longitudinal

examination of a single instance or event: a case. They provide a systematic way of looking at

events, collecting data, analyzing information, and reporting the results. As a result, according

to Flyvbjerg, the researcher may gain a sharpened understanding of why the instance happened

as it did, as well as what might be looked at more extensively in future research. For that

matter, case studies lend themselves to both generating and testing hypotheses (Flyvbjerg,

2006).

The author reiterates that case studies should be defined as a research strategy, an

empirical inquiry that investigates a phenomenon within its real-life context (Ibid). Flyvbjerg

also noted that case study research means single and multiple case studies which can include

quantitative evidence that relies on multiple sources of evidence and benefits from the prior

development of theoretical propositions. In a real research scenario, there is need of

eliminating the confusion between case studies with qualitative research due to the fact that

they can be based on any mix of quantitative and qualitative evidence. Hence the conclusions

drawn from the above is summarized by Lamnek, who suggests that the case study is a

research approach situated between concrete data taking techniques and methodological

paradigms (Lamnek, 2005).

The merger cases that I have chosen will be helpful due to the fact that I rely on Yin,

who suggests that the choice of multiple case designs (HP-Compaq and Volvo-Renault merger

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cases) will make the research work to be more ―compelling and robust.‖ And so in my

research, it will be easy to make comparisons and analyses of the collected data (Yin, 1984:

29).

2.3.1. The motivational factor behind the choice of the selected merger cases

Before going further into a deep discussion about the selected merger case from which my

research will be based, I would like to reason out why I was motivated into these change

processes. First of all, I was aware that the process of change involves a lot of dimensions that

would have been favored in this research. Some of these include; adaptation to new situations,

changing markets, globalization, knowledge transfer, alliances, outsourcing, innovation,

women leadership, from poverty to wealth and vice versa, as well as many more processes

that could have been interesting for this research. Being swayed was a unique experience that

took me considerable amount of time before deciding that the two selected mergers and

acquisitions would contextually be favorable for this research.

In the first place though, these change situations are a real test of competence and good

leadership since they leave an organization very disorganized, and in need of restructuring (e.g.

HP-Compaq merger). This may be in form of expected chaos that may either be short or long

term. Secondly, by researching about amalgamations, I envisaged that a wider choice of

scenarios would be of great interest because these range from politics, economics, social-

cultural situations, technological situations, firms and businesses, humans, the surrounding

environment, the changing times, education, name it—the list is endless. So, having been faced

with such occurrences, I was of the view that these cases were spot on for they are deeply

intertwined in most of the change dimensions hence making my thesis research broad and

interesting.

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3. THEORETICAL FRAMEWORK

Frames of reference may be defined as the past moments of socialization that does enable

people to locate, perceive, identify and label occurrences in their lives and world. In

accordance to Weick (1979), examples of frames of reference may be in form of ideologies,

local assumptions and definitions, paradigms, collective cognitive structures, traditions, as well

as stories and myths. In order to get deep into the research issue/ problem, the frames of

reference will be really so important since meaning is created against their background (Weick,

1979).

In this particular thesis research therefore, meaning/empirical results will therefore be

created if I succeed in constructing a plausible relationship between a frame and a cue. This

means that by relating the cues to a better known frame of reference, meaning is created about

the cue, and sense is made of what is happening, which can reaffirm or change the frame of

reference. I would like to personally assert that the possible meanings from this thesis research

will be quite many, and what is created therefore will be a matter of politics, pragmatics, values

and context, which therefore open up for active agents in the process.

3.1. The major literature to be used

The literature to be used during my research will give me a guide to the construction of

meanings towards the empirical frame. Being the main subject, leadership in general will be

discussed thoroughly hence giving me a good background to the problem. Transformational

leadership will also be part of the theoretical frame work, giving me all the necessary aspects

that are required for this research. Another area that requires literature review is the business

process re-engineering, a topic that will be central, due to the fact that costs, quality, and speed

variables were of much relevance during the HP-Compaq, as well as the Volvo-Renault

mergers. The leader‘s management styles will also be part of the theoretical frame work during

my thesis research. It is evident that patches of management are visibly seen within

leadership‘s sense making and the process of change. More literature about culture will be

involved in this theoretical frame simply because of the background from which my research

will take place.

Regarding the issue/ problem within this research, it is worthy to define what leadership

is, since much of the focus is based on it during the process of change. With a richly worded

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knowledge on leadership definitions, theories, and styles, it will be easy to reflect and make

clear conclusions during the latter stages of the research. Similarly, most of the present day

research is also based upon studies from the earlier researchers and authors on leadership.

3.2. Leadership concepts and theories

During the early part of the twentieth century, interest in leadership increased dramatically

(Northouse, 2004). This happened when early leadership theories had directed focus on the

qualities that distinguished leaders and followers, while subsequent theories looked at other

variables such as situational factors and skill levels of the leaders (Ibid).

3.2.1. Peter. F. Drucker on leadership

For Drucker, there is little if any difference between leadership and management by definition.

Leadership is not about a list of attributes, as no two leaders will exhibit the same list, nor is it

about charisma or some king-like quality. It is therefore all about delivery of performance, just

like management (Drucker, 1999). According to Drucker, effective leadership is one that is

associated to thinking through the organization‘s mission, defining it and then clearly/visibly

establishing it. In addition to defining and maintaining standards, it is the leader who sets the

goals and priorities with total clarity. Effective leaders do not blame others of their wrong

doing for leaders are all too aware that ultimately their responsibility to take care of whatever

happens. Still, they do not and should not fear powerful independent thinking subordinates.

Instead, the strong leader does whatever they can to encourage and champion their team o

course of becoming stronger themselves. For that matter therefore, the leader‘s task is to create

the energy and vision where others might flourish.

Drucker (1999) argues that trust is very important and must be earned. In his literature,

he suggests that without trust, the leader will not have any followers. However, this doesn‘t

mean that the leader must be loved, nor does it mean that the followers must agree with

everything the leader says or does. Instead the followers must believe that leaders mean what

they say. Supporting Drucker´s views is the Churchillian leadership trait of integrity, stating

that there must be congruency between a leader‘s beliefs, his/ her words and actions, and these

must be consistent (Drucker, 1999).

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3.2.2. John Adair on leadership

Yet another definitive theory about leadership comes from the man who went to The Royal

Military Academy of Sandhurst (UK), just like Winston Churchill (Northouse, 2004). Adair

believes that great leaders exemplify the qualities that they expect from others. And according

to him, this does not necessarily mean that they need to be experts in the subordinate‘s role

rather that they should personify the qualities desired. While no two leaders will embody the

same list of "leadership attributes", Adair highlights a core list: enthusiastic, energetic, calm in

a crisis, warm and tough yet fair. For Adair, leadership is a privilege to serve and so a leader

serves his followers.

For any successful leader, one has to attend to the tasks at hand, the needs of the team

and the needs of each individual. Adair illustrates these 3 elements of leadership via a Venn-

diagram with each element intersecting and hence affecting each other. In his reasoning, Adair

suggests that if something significant happens in one of the 3 elements it will have

consequences in the other 2, since all the three elements are meant to work together for a strong

sense of achieving the vision (Adair, 1996).

Task Team

Individual

Source: John Adair, 1996.

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Adair further reiterates that there is no one correct style of leadership- it therefore

depends on the situation. One example of this is that during peace times, there is no doubt that

Prime Minister of Britain Winston Churchill would not be so famous nor his leadership

regarded with such reverence had he been Prime minister of Mexico instead (Northouse, 2004).

Northouse reiterates that when setting the agenda for the task and team, it is important to use

skills such as goal setting, planning, communicating and evaluating. For this matter therefore,

the correct leadership style will depend on the leaders themselves, the time available, the

knowledge / experience of the team, the culture, as well as the available priorities. Adair (1996)

therefore suggests that leadership should involve consistency of character and flexibility of

method / style. Within this thesis research therefore, situational leadership will be of reflection,

and will result in drawing conclusions from different case situations.

My observation deduces that there is a clear contrast between leadership and

management. Although these two should work together within the industry set up, they are

clearly not the same. When I reflect on Adair's point of view though, leadership is about giving

direction, developing teams and inspiring others by one‘s words and deeds. In contrast to such

a view, as of when one is appointed a manager of a certain organization/company, leadership is

earned in the eyes of one‘s followers. An amazing observation therefore should be that whereas

leadership and change go together, management is about administering efficient resources

typically in a relatively stable environment.

3.2.3. The leadership theories

Gibb (1947) describes one of the commonly discussed theories about leadership; the Great

Man theory. The theory assumes that the capacity for leadership is inherent, meaning that great

leaders are born, not made. These theories often portray great leaders as heroic, mythic, and

destined to rise to leadership when needed. The term ―Great Man‖ was used because, at the

time, leadership was thought of primarily as a male quality, especially in terms of military

leadership (Gibb, 1947). It can also be referred to as the trait approach to leadership that

regarded good leaders according to their traits. However, this approach came to a halt when

researchers found out that it was not consistent and there was not any evidence to confirm its

importance (Ibid).

Contingency theories, as one of leadership theories focus on particular variables related

to the environment, which might determine the particular style of leadership that is best suited

for the situation (Fielder, 1964). According to this theory, no leadership style is best in all

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situations. Fiedler reasons that success depends upon a number of variables such as the

leadership style, qualities of the followers, as well as the aspects of a given situation.

Nevertheless, it is believed that leaders prioritize between task-focus and people-focus where

by the relationships, power and task structure are the three key factors that drive effective

styles (Fiedler, 1964). In this particular research therefore, it will be found out if the

transformational leaders posses the competencies to focus on what would be fruitful for the

business.

Situational theories propose that leaders choose the best course of action based upon

situational variables. Different styles of leadership may be more appropriate for certain types of

decision-making (Northouse, 2004). According to Northouse, the path-goal theory of

leadership was developed to describe the way that leaders encourage and support their

followers in achieving the set goals by making the path that they should take clear and easy. In

accordance to Evans (1970), leaders do clarify the path so that subordinates should know

which way to go, by removing roadblocks that are stopping them from going there, hence

increasing the rewards along the route (Evans, 1970).

Behavioural theories are another of the leadership theories that are based upon the

belief that great leaders are made, not born. Northouse (2004) argues that this leadership theory

focuses on the actions of leaders, but not on mental qualities or internal states. This theory

suggests that people can learn how to become leaders through teaching and observation (Ibid).

Another theory—management theory can also be referred to as transactional. The

theory focuses on the role of supervision, organization, and group performance. According to

the theory, leadership is based on a system of reward and punishment( Northouse, 2004).

Managerial theories are often used in businesses where by if at all employees are successful,

they are rewarded but if they fail and are not successful, they would be reprimanded or

punished (Ibid). One other theory which is a big subject of this research is transformational

theory, which results in transformational leadership.

My motivation to put a little more focus on the theories in this research is based upon

the need to know their background and the effects that are portrayed on leadership, and also

have a good ground / base from which to discuss transformational leadership. Added to that, I

will tend to find out how these theories relate under circumstances of change, to examine

whether some of them still exist in the modern day business world.

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3.3. The different leadership styles

Leadership styles were first identified by a group of researchers led by psychologist Kurt

Lewin in 1939. While further research has identified more specific types of leadership, this

early study was very influential in establishing three major leadership styles. In the study,

groups of schoolchildren were assigned to one of three groups with an authoritarian,

democratic, or laissez-fair leader. The children were then led in an arts and crafts project.

Lewin´s research then observed the behaviours of children in response to the different styles of

leadership (Lewin, 1951).

3.3.1. Authoritarian/ Autocratic leadership

In accordance to Lewin (1951), authoritarian leaders provide clear expectations for what needs

to be done, when it should be done, and how it should be done. This is tantamount to saying

that there is also a clear division between the leader and the followers. Authoritarian leaders

make decisions independently with little or no input from the rest of the group. Researchers

found that decision-making was less creative under authoritarian leadership. Lewin also found

that it is more difficult to move from an authoritarian style to a democratic style than vice versa

hence abuse of this style is usually viewed as controlling, bossy, and dictatorial (Lewin, 1951).

3.3.2. Participative/ Democratic leadership

According to Lewin( 1951), the democratic type of leadership is generally the most effective

leadership style due to the fact that not only do they offer guidance to group members,

democratic leaders also participate in the group and allow input from other group members.

Lewin´s studies of children in this group were less productive than the members of the

authoritarian group, but their contributions were of a much higher quality. Participative leaders

therefore encourage group members to participate, but retain the final say over the decision-

making process (Lewin, 1957). Such a scenario makes group members to feel engaged in the

process, hence becoming more motivated and creative (Northouse, 2004).

3.3.3. Delegate /Laissez-Fair leadership

In accordance to Lewin, children under delegate (laissez-fair) leadership were the least

productive of all three groups. The children in this group also made more demands on the

leader, showed little cooperation, and were unable to work independently

(Lewin, 1951). It was found out that delegate leaders offer little or no guidance to group

members and leave decision-making up to group members. However, while this style can be

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effective in situations where group members are highly qualified in an area of expertise, it

often leads to poorly defined roles and a lack of motivation (Ibid).

My interest in clarifying about these different leadership styles is that while doing this

research, it will be important to find out the type of leaders that will be faced. The leader‘s

recognition of what is best for their organization is tantamount to visualizing

leadership/management at its best in practice. The selected cases studies in this research

involve leaders with different styles of leadership and as it will be envisaged in the empirical

study, leadership styles may affect the leader‘s competencies in performance.

3.4. Transformational leadership

One of the main focuses of this research is based on the theory of transformational leadership

as of when the process of change is taking place within an organization. As regards to the

research problem/ issue of weather leaders employ the required competence, Bennis and Nanus

(1985) argue that the need for transformational leaders to make things happen get a spotlight in

the sense that whenever change takes place within the above mentioned setups, the success or

failure to achieve the set targets, goals, or vision is an obligation of leaders to do or not to do

what is required (Bennis and Nanus, 1985). Therefore, the theoretical frame of references

regarding transformational leadership will definitely help me get to a stepping stone towards

the empirical findings within this research.

3.4.1. The transformational leadership description

In accordance to Bryman (1992), Transformational leadership surfaced in the 1980´s as part of

The New Leadership Paradigm/ approach. The term New Leadership has been used to describe

a number of approaches to leadership that seemed to exhibit common or at last similar themes,

although undoubtedly, there were differences between them (Bryman, 1992). Together, these

different approaches seemed to signal a new way of conceptualizing and researching about

Leadership. This led to the writers to employ a variety of terms that describe the new kinds of

leadership with which they were concerned at that time— transformational leadership (Bass

1985; Tichy and DeVanna 1986), charismatic leadership (House 1977; Conger 1989),

visionary leadership (Sashkin 1988; Wesley and Mintzberg 1989), and simply leadership

(Bennis and Nanus 1985).

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Together, all the researchers within the new leadership paradigm revealed a conception

of a leader as some one who defines organizational reality through the articulation of vision

which is a reflection of how he or she defines an organization‘s mission and the values which

will support it (Northhouse, 2004).

Northouse (2004:170) opines that as the name implies, transformational leadership is a

process that changes and transforms individuals in the way that it is concerned with emotions,

values, ethics, standards, and long -term goals, and includes assessing follower‘s motives,

satisfying their needs, on top of treating them as full human beings. Northouse reiterates that

transformational leadership involves an exceptional form of influence, that moves followers to

accomplish more than what is usually expected of them. It is a process that incorporates

charismatic and visionary leadership (Northouse, 2004: 170).

3.4.2. The definition of transformational leadership

The term transformational leadership emerged as an important approach to leadership with the

beginning of classical work by the political sociologist James Macgregor Burns, where he

attempted to link roles of leadership and followers. In his work, Burns wrote that leaders are

those individuals who tap the motives of followers in order to better reach the goals of leaders

and followers (Burns, 1978).

Reflecting on Burns work though, it‘s agreeable that leaders and followers are still a

formidable team, whose actions put a big impact towards the motive realization. It is well

known that many scholars have attempted to make sense out of his findings and since it is three

decades ever since he did his work, it is understandable that the changing political, economic,

technological, and social situations leads his work into new directions, as people‘s tastes and

preferences also change.

Burns distinguished between two types of leadership: transactional and

transformational. Transactional leadership refers to the leadership models which focus to the

exchange that occurs between leaders and their followers (Burns, 1978). Citing from modern

day examples; within a class room, teachers can be transactional when they give students a

grade for work completed. Similarly politicians who win elections through promising

economic reforms do demonstrate transactional leadership, and managers who offer

promotions to employees that surpass their goals also exhibit transactional leadership.

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In contrast to transactional leadership, transformational leadership refers to the process

in which an individual engages with others and creates a connection that raises the level of

motivation and morality in both the leader and the follower. One example of such of such a

leader is Mahatma Ghandi who was attentive to the needs and motives of followers by trying to

help them reach their fullest potential. Similar to Ghandi was Martin Luther King, who raised

the hopes and demands of millions of people for a just cause (Gardner, 1995).

3.4.3. Transformational leadership and charisma

The concept of charisma came up when researchers used to describe a special gift that is

possessed by selected individuals. Max Weber (1947) described charismatic individuals as

ones who have the capacity to perform extra ordinary things. In the beginning of the whole

story of charismatic leaders, Max Weber had described them as heroes that transformed and

changed the world until the point when they were ousted or succeeded by bureaucratic or

authority that was traditional. Weber meant that these individuals had super human or

exceptional power that is reserved for a few, is of divine origin, and results into some one

becoming a true leader (Weber, 1947). Burns (1978) expounded on Weber‘s work and

reasonably distinguished that transactional leaders were like bureaucrats, whereas charismatic

heroic leaders were the transformation leaders (Burns, 1978).

Like Weber, Burns reasoned that moral values were important to leadership and that

while transforming leaders focused on ends, transactional leaders negotiated and bargained

over the means. In his tireless work to the science though, Burns studied the historical, social,

economic, and political context of the theories of great leaders to develop subcategories of both

transactional and transformational leaders.

Weber‘s emphasis on charismatic leadership as a personality characteristic added

recognition of the important roles played by followers in validating charisma in their leaders

(Bryman 1992; House, 1976). Breaking through different ranks, House suggested that

charismatic leaders are ones that act in unique ways which have specific charismatic effects

onto their followers. In addition to displaying certain personality characteristics, House

lamented they also demonstrate specific types of behaviours. One good example of this is

Mahatma Ghandi who advocated non-violence and was an example of a role model of civil

disobedience. On the other side of the dice was Martin Luther King who articulated an

ideological goal that had moral overtones in his speeches (Gardner, 1995: 203). Another of

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these great leaders was John F. Kennedy, who aroused task- relevant motives to the Americans

that may include affiliation, power, or esteem (Ibid).

3.4.4. The transformational leadership model

Transformational leadership models were developed by Bass, who went ahead with researching

about Burn‘s earlier work on transformational leadership. With his tireless work, Bass begun

by highlighting that Burns did not pay attention to the portfolio of followers´ needs and wants,

restricted transformational leadership to moral ends, and worst of all, set up a single continuum

running from transactional to transformational leadership types (Bass, 1985). Bass further

suggested that transformational leadership could apply to situations in which the outcomes

were not positive. This would be true when describing transactional and transformational

leadership as a single continuum rather than mutually independent continua. In accordance to

Yammarino( 1993), Bass extended House‘s work by giving more attention to the emotional

elements and origins of charisma and by suggesting that charisma is a necessary but not

sufficient condition for transformational leadership (Ibid).

Source: Bass, 1985.

In accordance to my submission herein, earlier research brings up an argument that

transformational leadership motivates followers to do more than the expected by raising the

follower‘s levels of consciousness about the importance and value of specified and idealized

goals. In so doing, they get followers to transcend their self-interest for the sake of the team or

organization, as well as moving followers to address high level needs. Such kind of attitude is

crucial to the direction in which the organization is going during the process of change and

much of it will be discussed more, while researching about the issue/ problem.

Transformational

Leadership

Transactional

Leadership

Laissez-faire

Leadership

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3.4.5. Transformational leadership and self-efficacy

Talking about transformational leadership without relating it to motivation would not really

make sense. Motivation is a central issue for transformational leaders as of when the process of

change is taking place because without it, leaders would not possess their full character to carry

out action.

In relation to motivation, self-efficacy is defined as the beliefs in one‘s capabilities to

organize and execute courses of action required in managing prospective situations. According

to Bandura (1997), efficacy beliefs influence how people think, feel, motivate themselves, and

act (Bandura, 1997). Several studies have demonstrated the importance of self-efficacy for

improving performance in the organizational context (Gist and Mitchell, 1992). Originally

conceived of as a task-specific variable, support has been shown for general self-efficacy

which is a disposition predicting individual behaviour across situations. Among the

determinants of self-efficacy are enactive mastery (personal attainment), vicarious experience

(modelling), verbal persuasion and physiological arousal; all of which serve to increase self-

efficacy perceptions (Gist and Mitchell, 1992).

3.4.6. Transformational leadership, cohesiveness, performance and

commitment

Festinger (1950) opines that group cohesiveness is described as the resultant forces which are

acting on the members to stay in a group (Festinger, 1950). This definition has been widely

accepted by researchers who have spent valuable time on a very important issue; group

cohesion. This particular topic has also led other researchers to describe cohesiveness as the

degree to which group members are attracted to, and motivated to stay with a group (Zaccaro et

al., 1995). Zaccaro et al (1995) argue that leaders who show consideration for their followers

cause them to become more attached to the group. Such leaders may thus draw the group closer

together towards the attainment of group goals. Bass (1985) argues that the collectivistic focus

of groups led by transformational leaders where there is a consensual sharing of meaning may

be a catalyst in eliciting higher levels of commitment and performance (Bass, 1985).

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Self-Efficacy

Transformational

Leadership

Cohesiveness

Commitment

(Internalization)

Perceptions of

Unit Performance

Source: Pillai and Williams, 2002.

In relation to the theoretical model shown in the above figure as well as the consistency with

the arguments presented, direct relationships are specified from leadership to self-efficacy,

cohesiveness, performance and commitment. Zaccaro et al (1995) argue that in the presence of

transformational leadership, cohesive groups with members who have high levels of self-

efficacy are motivated in turn, to perform at higher levels and be highly committed, which in

turn may bring about positive changes in the organization (Zaccaro, et al, 1995). By using the

strategies of visioning, coupled with setting high performance expectations for the group, and

participation in the group goal setting, transformational leaders may be successful in

motivating group members to remain attracted to the group, make personal sacrifices and work

towards a common goal (Ibid). Nevertheless, by internalizing the values of the leader,

followers of transformational leaders identify the vision and become committed to collective

interests that can bring about the desired organizational change.

My comments from such readings are that in any given company or organization, it

appears that transformational leaders have the capability and competencies meant to facilitate

the formation of a cohesive group that performs at higher levels. This great role that is played

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by the transformational leaders means that the cohesive group is not only committed to the

group, but also to the organization as whole.

3.5. The change process

3.5.1. Introduction

Burke (2002) contends that every day and time that passes by, organizations do go through the

process of change. Significant organizational changes occur for example, when an organization

changes its overall strategy in order to realize success, adds or removes a major section or

practice, or even changing the very nature by which it is doing business/operations (Burke,

2002). The occurrence of change may also happen when an organization evolves or goes

through various life cycles, just like how people must successfully go through different ages

and decades. Burke (2002) reiterates that for organizations to have a clear sight of its much

needed vision, they often must undergo significant change at various points in their

development. This explains the reason why organizational change and development as a topic,

has become widespread in communications about business, organizations, leadership and

management practices (Ibid).

According to my understanding, the need for change in organizations today is larger

than ever. It should be believed that since the need for such an increasing demanded overhaul

is sky rocketing, there must be reasons for this; Changing markets, changes in work

environment requirements, demands for more effectiveness from parent companies, demands

of openness from both public authorities, share and stake-holders, the demands for more

flexibility towards employee family life and leisure time, internationalization, etc. The list is

really endless but it should be noted and asserted that such incidences indicate how real the

exact need is, an indication to a desired and continued future success. Consequently, this

results in sending these organizations´ decision makers into situation rooms for detailed

preparations before implementation of these changes. However, the easiest change to create is

one that is mandatory.

Often, there are laws that require change to be made in organizational policy. One good

example is the non-discrimination laws requiring employers to investigate and put a stop to

harassment if it is based on age, sex, race, colour, religion, disability, etc. In that sense, if at all

that sort of harassment is truly happening, the easiest way of making the needed changes may

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be simply pointing out to the people in power in requirement of the law. On the contrary

though, this research will be based upon the changes that are rather not mandatory, but

necessary as it will be detailed in the merger cases.

3.5.2. The different types of organizational change

Having a closer discussion about the types of change within this research is meant to give a

profound background to the areas that are covered. In relation, it will highlight the effects of

change to the dynamics of leadership and culture.

According to Burke( 2002), the phrase ―organizational change‖ is about a significant

change in the organization, which may be in form of reorganization or adding a major new

product/ service. The change of this type may be termed as revolutionary. A notable example

of this huge overhaul may be adopting a new computer procedure, setting up new production

lines, restructuring the marketing techniques, etc. Nevertheless, organizational change can

seem like such a vague phenomena that is really helpful if one can think of change in terms of

various dimensions (Burke, 2002).

McNamara (2008) argues that the planning of change creates one of the types in

organizations. Unplanned change usually occurs because of a major, sudden surprise to the

organization that causes its members to respond in a highly reactive and disorganized fashion

(McNamara, 2008). Unplanned change for example might occur when the Chief Executive

Officer suddenly leaves the organization, when significant public relations problems occur, as

well as having a scenario of poor product performance which may quickly results in loss of

customers (Ibid). On the other hand, planned change occurs when leaders in the organization

recognize the need for a major change and proactively organize a plan to accomplish the

change. Change that is well planned may also occur with a successful implementation of a

strategic plan for reorganization, or any other implementation of a change of this magnitude (

Ibid) Note that planned change, even though based on a proactive and well-done plan, often

does not occur in a highly organized fashion. Instead, it tends to occur in more of a chaotic and

disruptive fashion than expected by participants (Ibid). One typical example of such a change

process was the HP and Compaq merger case.

Burke (2002) argues that another type is the organization-wide change in comparison to

the subsystem type of change. Usually, organizations must undertake organization-wide change

to evolve to a different level in their life cycle. Such an example would be going from a highly

reactive entrepreneurial organization to one that has a more stable and planned development.

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Examples of organization-wide change might be a major restructuring, collaboration, etc.

Experts assert that successful organizational change requires a change in culture – hence

cultural change is another example of organization-wide change. On the other hand, subsystem

change may include addition or removal of a product or service, reorganization of a certain

department, or implementation of a new process to deliver products or services (Burke, 2002).

According to Warner W. Burke, change can be intended to remedy current situations

such as the improvement of the poor performance of a product / entire organization, reduction

of burn out in the workplace, helping of the organization to become much more proactive and

less reactive, as well as addressing large budget deficits (Burke, 2002). Remedial projects often

seem more focused and urgent because they address a current, major problem. It is often easier

to determine the success of these projects due to the fact that the outcome may lead to either

solving the problem or not.

Burke (2002) also opines that change can be developmental, which may be viewed in

ways that may make a successful situation even more successful. Added to the above is the

expansion of the amount of customers served, or duplicate successful products or services

(Ibid). Developmental projects can seem more general and vague than remedial, depending on

how specific the goals are and how important it is for members of the organization to achieve

those goals. Some leaders might have different perceptions of what is a remedial change versus

a developmental change because they might reason that if developmental changes are not made

soon, there will be need for remedial changes hence recognition of current remedial issues to

establish a developmental vision, in need of addressing the issue (Burke, 2002). Having such

an attitude is a typical example of transformational leaders like Carly Fiorina, the former CEO

of HP.

De Wit and Meyer (2004) argue that most managers within the business world tend to

struggle in selecting an approach for strategic change and how bold they should be yet the

reality remains that in order to fundamentally transform the organization, a break with the past

is essentially needed (De Wit and Meyer, 2004). On the other hand, they also recognize the

value of continuity, building on past experiences, investments and loyalties. In order to achieve

active strategic renewal, people in the organization will need time to learn, adapt and grow into

a new organizational reality (De Wit and Meyer, 2004: 170).

According to De Wit and Meyer (2004), revolutionary change processes are those that

do not build on the existing status-quo but rather over throw it. It is a process where by radical

The Change Process:


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and abrupt changes occur over a short time period (De Wit and Meyer, 2004). Also known as

transformational, revolutionary change might involve changing an organization‘s structure and

culture from the traditional top-down, hierarchical structure to a large amount of self-directing

teams (Ibid). Such a fundamental approach of strategic change is generally needed when

organizational rigidity is so deeply rooted that smaller pushes do not bring the firm in to

recognizable movement. Worth a mention due to its opposite-like nature to revolutionary

change, is evolution. De Wit and Meyer (2004) describe evolutionary change as a process

whereby a constant stream of moderate changes gradually accumulates over a long period of

time. The cumulative result can be large in each small change process; where by the current

firm is taken as a starting point that leads to constantly modifying aspects through extension

and adaptation (Ibid). Kaizen according to De Wit and Meyer (2004) is one of its most popular

examples, highly credited for incremental changes due to organizational learning.

3.5.3. The Business Process Re-engineering (BPR)

According to the Michael Hammer, Business Process Re-engineering (BPR) is the fundamental

reconsideration and the radical re-design of organizational processes in order to achieve drastic

improvement of current performance in cost, service, and speed (Hammer, 1997). We can not

really deny the fact that changes during this era is typically quite revolutionary due to the fact

that it washes away the existing status within the whole organization. As it will be discussed

later in this research, in modern day era, change is not only affecting organizations and

competitive companies, but we are also envisaging a paradigm shift in the social cultural

attitudes and behaviours towards change. Transformational leadership for this matter is central

and plays a huge role if an organization is in need of realizing success. It is however a point of

note that almost all the cases and references that will be covered during this research have a re-

engineering process background. On its part though, Business Process Re-engineering tries to

scrutinize (at least on paper, at first) the major parts and processes of the organization and then

integrates them in a more optimal fashion (Hammer, 1997).

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3.5.4. Steps that are a real test of competence

Source, own visualization: 2008.

In dire need for change, organizations need to follow the steps above. Although the need for

change is too much on the agenda for different organizations, the destination is always

unfamiliar as well as challenging to them. Along the difficult road, this process requires

transformational leaders to be on top of the game, in order to transform the organization. It has

nevertheless been proven by researchers that leaders who may not find any difficulties along

this journey will be tagged competent (Burke, 2002). In doing so therefore, leaders need to

assess the need for change and this can be achieved through finding the source of the problem.

It is certainly true that in order to advocate for change, there has to be satisfactory reasons from

which the basis of the initial process will be drawn. The second stage on the grid suggests that

organizations need to decide on the change that will have to occur by identifying the obstacles

which lie ahead of implementation (Burke, 2002). The third step would be the implementation

process in which managers would decide upon the choice of using either the top-down or

bottom-up procedure. Finally, the evaluation process of change comes into frame, after

implementation (Ibid). The evaluation is meant to measure the progress of the implemented

process through assessing the performance in the key indicators. According to my

understanding, leaders that go through all these steps unscathed will always be given credit.

However, it is highly dependent on the achieved results and the level of effects on the other

Assess need for

change

Decide on the

change

Implement

change

Evaluate

change

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parties involved. Hence organizations that boast of competent transformational leaders in

successfully architecting this process have a high survival chance within any competitive

business environment.

3.5.5. Models of organizational change

The various organizational models that do exist are based on an open system theory and come

from the world of organization development, meaning that they address what to diagnose for

change, and to some degree consider how to intervene so that organization change can be

implemented. These models represent an integration of content and process and have therefore

evolved from both practice and theory.

During this thesis research, the chosen cases of HP-Compaq and Volvo-Renault

mergers will be fit and evaluated basing on the Burke-Litwin model of organizational change,

which contains elements of transformational leadership, management, change, organizational

culture, etc.

3.5.6. The Burke-Litwin model

The roots of the Burke-Litwin model come from the organizational studies conducted by

Litwin and colleagues during the latter period of the 1960´s. For his part with Litwin, Burke

began collaborative work in the arena of organizational change consulting, to develop the

model further in the 1970´s and 1980´s. They did this first with Citibank, and later with British

Airways (Burke, 2002).

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Leadership

External

Environment

Management

Practices

Work Unit

Climate

Motivation

Individual &

Organizational

Performance

Organization

Culture

System

(Policies &

Procedures

Individual

Needs and

Values

Mission and

Strategy

Structure

Task Requirements

And Individual

Skills/ Abilities

feedback

feedback

Source: Burke, 2002: 199.

In accordance to Burke and Litwin (Burke, 2002), key to understanding change is the top half

section that consists of external environment, leadership, organizational culture, mission and

strategy, as well as individual and organizational performance. The top half of Burke and

Litwin model are drawn from the ideas and concepts of James McGregor Burns and his

distinctive description of transformational leadership. To Burns, transformational leaders are

ones that bring about change in the organization (Burns, 1978). On the opposite side are the

transactional leaders who are said to comprise the leader-follower relationship taken as a

transaction, i.e. in form of promotions, bonuses, etc. The direct interaction with the external

environment is the likely root cause of the changes in the transformational factors that

significantly require new behaviour from organizational members. In relation to this thesis

research therefore, a change in any of these transformational variables or organizational

dimensions will mean that the entire organization or system is affected and that the change is

discontinuous or revolutionary in nature, resulting in affecting the deep structure of the system.

Such a scenario usually requires visionary leadership.

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Burke (2002) argues that at the bottom half of the Burke and Litwin model are the

organizational dimensions that include management practices, structure, work unit climate,

systems, motivation, individual needs and values, task requirements and individual

skills/abilities, as well as individual and organizational performance (Burke, 2002). In this

bottom half though, transactional factors are clearly seen under this umbrella. Burke and

Litwin suggest that these factors are the ones that should be given consideration when under

continuous improvements, evolutionary or selective change processes.

3.5.7. The implementation process in particular

The implementation of organizational change is a phenomenon that has long been difficult and

problematic. Over time two approaches towards implementation have developed. These are;

the participative approach, which assumes that employee support, is a pre-requisite of change,

and; the unilateral approach which argues that if there is need for change, the first variable to

be changed is behavior, then followed by the attitudes of employees. In accordance to Wilfried

Kruger (1996), a study of different change episodes indicate that unilateral implementation

approaches are more effective than participative approaches. Nevertheless, in today‘s change

processes, while employee support is related to change success, it is the function of the change

type but not participative implementation. The content of implementation activities largely

depends on the depth of change, which is said to be evident where behavioral-social change

types generate more support from the employees than technical-structural changes (Kruger,

1996).

Kruger (1996), in De Wit and Meyer (2004) opines that the core problem of change

though, is the existence of various factual and personal barriers that have to be identified and

handled by implementation (De Wit and Meyer, 2004: 208). These barriers can be roughly

classified into company-wide barriers, management barriers, and employee barriers. As a point

to note for instance, Kruger (1996) reiterates that company-wide barriers may be embedded

within the imaginary sum of values shared by all company members, their mind-sets, as well as

behavioral patterns which form a backbone of the corporate culture. Usually, barriers arise due

to the fact that as the corporate culture gains more strength and effectiveness, creating changes

becomes one of the most difficult things to effect (De Wit and Meyer, 2004). On the other

hand, management barriers may lie in the field of problem awareness and problem solutions.

Problem awareness is often dealt with in the daily running of the business where urgent issues

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are dealt with as of when they happen instead of dealing with the important ones (Ibid). One

tricky situation is when a problem arises. Faced with this expert-doer syndrome scenario, the

expert tries to implement the previously successful solutions without realizing the changed

situations (De Wit and Meyer, 2004). In case of failure, there is a tendency of applying more

emphasis by the expert hence resulting into a vicious circle of effort, failure and

intensification—a situation in which if the neglect of the need for rethinking happens, the result

is an attitude barrier to change (Ibid). The employee barriers to change are another of the

mentioned barriers. Kruger (1996), states that this may occur when the middle and lower

management have to be thoroughly convinced about the need for change. Even when top

management Okayed the need for change, many other employees may be a barrier, which may

result in opposition.

Kruger’s Iceberg of Change Management

Kruger‘s Change Management Iceberg is a strong visualization of dealing with barriers to

change within an organization. This Iceberg model illustrates that transformational leaders

need to deal with a great deal of barriers if at all there is genuine need to communicate and

implement the unprecedented or once failed change in an organization.

Promoters

Hidden

opponents

Opponents

Potential

promoters

Acceptance

Issue

Management

Power

and Politics

Management

Management

of Perceptions

and Beliefs

BehaviourAttitude

negat

ive

positiv

e

negative

positive

Quality

Cost Time

The Change Process:


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Source: De Wit and Meyer, 2004: 217.

Just as illustrated above, Kruger‘s model indicates that most leaders are issue managers. He

indicates that in order to have an overhaul with in the organization, managers only consider

achievements through three variables; reducing costs, focus upon good management of time,

and production of quality products for the final consumer (Kruger, 1996). However, beneath

the water surface lays management of perceptions and beliefs as well as the power and politics

management. It should be noted that the kind of arising barriers, and the form of

implementation management that is consequently sought depends on whether change is

revolutionary (radical) or evolutionary (incremental) (Ibid). In a move to further justify his

reasoning, Kruger states that hard issues such as information systems, processes, etc just

scratches the surface whereas soft issues such as values, mindsets, and capabilities, etc are

much more profound (De Wit and Meyer, 2004).

Kruger‘s (1996) model further indicates that transformational leaders/ managers who

would play a role in influencing the implementation of change may have to conduct an

assessment upon the attitudes and behaviours of the organization‘s employees, hence

exercising competence. Within these attitudes and behaviours, are the four target groups of

promoters, potential promoters, opponents, and hidden opponents. As envisaged in the diagram

above, all the three dimensions (management of perceptions and beliefs, issue management,

and power and politics management) are assigned to the four target groups.

Opponents of change according to Kruger are negative in both their attitudes and

behaviour. In order to change their attitudes towards accepting change, they have to be

controlled by the management of perceptions and beliefs that may be in form of inducements,

incentives, etc. (De Wit and Meyer, 2004). On the other hand, promoters have both a positive

generic attitude and behaviour towards change. For promoters, a bit of persuasion may be

needed since they take full advantage of change and hence fully support it (Ibid). Hidden

opponents, as shown on the diagram, posses negative generic attitudes towards change

although their behaviours have a positive indication and support for change (Ibid). When faced

with such opportunists the management of perceptions and beliefs, supported by information

(issue management) is usually needed to change their attitudes (Kruger, 1996). Finally, as

shown on the diagram, potential promoters who have a generic positive attitude towards

change. However, for certain reasons, they are not fully convinced about this particular change.

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It is there fore noted that the power and politics management seems to be appropriate in dealing

with potential promoters.

De Wit and Meyer (2004) opine that dealing with change is a permanent task and

challenge for general management. Superficial issue management can only achieve acceptable

results at a level that is consistent with the acceptance that lays below the surface (De Wit and

Meyer, 2004). The base of change management is rooted in both the interpersonal and

behavioural dimensions, as well as the normative and cultural dimensions hence exposing it to

be subject to power and politics management, and the management of perceptions and beliefs

(Ibid).

As will be discussed later in this research, attitudes and behaviours had a big effect

towards the need to implement change in the selected cases and will be scrutinized in order to

find some useful results within the latter stages of the research.

3.6. The sense making process

―Common sense is the collection of prejudices acquired by age eighteen”

—Albert Einstein

3.6.1 Introduction

During the ever challenging process of change, transformational leaders are usually faced with

a number of crucial decisions to make, in order to see to it that they follow the right direction.

One of the most challenging scenarios is making proper sense of the changing situations,

coupled with making the right decisions in order to move into a desired direction. Modern day

organizations have to adjust to a number of the many dramatic changes that range from

fundamental restructuring to the revolutionary shifts in traditional values, just as it will be

envisaged in the empirical part regarding HP-Compaq merger, as well as Volvo-Renault

merger.

Weick and Kathleen (2005), argue that these required changes are largely attributed to

drastic changes in the way in which organizations respond to the scope of operation, i.e. the

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environment. Globalization and the resultant advancements in information technology are

some of the main contributors of modern organizational structuring, both of which pertain to

highly complex communication activities and considerations that have become part of the

organizations enactment with micro systems such as inter-organizational activities, as well as

macro systems such as trans-national synergies, strategic geographic positioning, etc (Weick

and Kathleen, 2005). This reflects the paradigm shift from traditionally closed operating

procedures to highly flexible and innovative contemporary organizations (Ibid).

In accordance to Verwey and Du Plooy-Cillers ( 2003), the main paradox is that

organizations do need existing paradigms in order to make sense of current situations and this

can trap organizations in current paradigms (Verwey and Du Plooy-Cillers, 2003). Note that

contemporary management theories such as Weick´s sense making reflect a deep restructuring

of core competence that values an organization‘s sense making process when dealing with a

situation like environmental equivocation( Weick and Kathleen, 2005).

3.6.2. An insight into the sense making process

In accordance to Weick (1995), the sense making process involves turning circumstances into a

situation that is comprehended explicitly in words and that serves as a springboard into action.

The seemingly transient nature of sense making belies its central role in the determination of

human behaviour, whether people are acting in formal organizations or elsewhere (Weick,

1995). Contextualizing Mills (2003) idea within this thesis research, the centralization of sense

making becomes an interesting subject because it is the primary site where meanings

materialize, on the road to inform, and constrain identity and action. (Mills, 2003) When we

say that meanings materialize, we mean that sense making is, importantly, an issue of

language, talk, and communication. In this incidence, situations, businesses, organizations, and

environments are talked into existence (Ibid). Weick and Kathleen suggest that the emerging

picture is one of sense making as a process that is ongoing, instrumental, subtle, swift, social,

and easily taken for granted (Weick and Kathleen, 2005).

Crucial to transformational leadership as of when change is taking place, sense making

clearly involves the ongoing retrospective development of plausible images that rationalize

what people are doing. Weick (1995) contends that while it is viewed as a significant process

of organizing, sense making unfolds as a sequence in which people concerned with identity in

the social context of other actors engage ongoing circumstances from which they extract cues

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and make plausible sense retrospectively, while enacting more or less order into those ongoing

circumstances (Weick, 1995).

3.6.3. Enactment, organizing, and sense making relationships

According to Warglien (2002), the preceding overview of early activities of sense making and

organizing that mobilize around moments of flux needs to be compressed if it is to guide

research and practice. One way to do that is to assume that ―a system can respond adaptively to

its environment by mimicking inside itself the basic dynamics of evolutionary processes‖

(Warglien, 2002: 110). Basing upon the sense making assumption, the basic evolutionary

process is one in which retrospective interpretations are built during interdependent interaction.

This frame work proposes that sense making can be treated as reciprocal exchanges between

actors (Enactment) and their environments (Ecological Change) that are made meaningful

(Selection) and preserved (Retention). However, Waglien (2002) reiterates that these

exchanges will continue only if the preserved content is both believed (positive causal linkage)

and doubted (negative causal linkage) in future enacting and selecting. It should hence be noted

that systems are able to benefit from the lessons learned, added to updating either their actions

or meanings in ways that adapt to changes in the system and its context. This will for that

matter only happen with ambivalent use of previous knowledge (Ibid).

Ecological

ChangeEnactment Selection Retention

Ongoing

updating

Retrospect

Extracted

cues

Identity

plausibility

Feedback of identity

on selection and

enactment

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Source: Weick 1979: 132.

My own analysis of the above diagram is that if leaders conceptualize organizing as a sequence

of ecological change; enactment; selection; and retention, with the results of retention feeding

back to all three prior processes, then the specific activities of sense making fits very well into

this more general progression of organizing. According to Weick and Kathleen (2005), the

reciprocal relationship between ecological change and enactment includes sense making

activities of sensing anomalies, enacting order into flux, and being shaped by externalities. The

organizing process of enactment incorporates the sense making activities of noticing and

bracketing (Ibid). These activities of noticing and bracketing, triggered by discrepancies and

equivocal tendencies in ongoing projects, begin to change the flux of circumstances into the

orderliness of situations. Weick (1995) opines that the close fit between processes of

organizing and sense making illustrate the recurring argument that people organize to make

sense of equivocal inputs, and enact this sense back into the world with the prime aim of

making the world more orderly (Weick, 1995).

3.6.4. Organized sense making through communication

Taylor and Van Every (2000) opine that communication is a central component of sense

making and organizing. In this particular incidence, we see communication as an ongoing

process of making sense of the circumstances in which people collectively find themselves and

of the events that affect them. To the extent that it involves communication, sense making

takes place in interactive talk and draws on the resources of language in order to formulate and

exchange through symbolically encoded representations of these circumstances. As this occurs,

a situation is talked into existence and the basis is laid for action to deal with it (Taylor and

Van Every, 2000).

In accordance to Weick (1995), the image of sense making as an activity that talks

events and organizations into existence suggests that patterns of organizing are located in the

actions and conversations that occur on behalf of the presumed organization and in the texts of

those activities that are preserved in social structures. Weick´s organizing for that matter

highlights the paradigmatic nature of organizations, as something that people accomplish

through a continual process of communication (Weick, 1995). The question of dualism

between communication and organizations represents a symbolically realized construction

produced by the interaction process of the organizations members and

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the micro system they occupy (Taylor and Robichaud, 2004). Littlejohn and Foss (2004)

suggest that these exact symbolically realized constructions emphasize the importance of

interlocked behaviour as they create, maintain, and are adjusted in accordance with the

normative competence that are necessary to reduce uncertainty (Littlejohn and Foss, 2004).

3.7. The effect of culture in the change process

“If we are to achieve a richer culture, rich in contrasting values, we must recognize the

whole gamut of human potentialities, and so weave a less arbitrary social fabric, one in

which each diverse human gift will find a fitting place.”

—Margaret Mead

3.7.1. Introduction

In my personal opinion, there is no doubt that culture plays a big role in the process of change.

Most transformational leaders experience and act towards change situations that are carried out

in different cultural backgrounds, a phenomenon that makes them outstanding after

successfully dealing with complex situations. A leader who may succeed in properly dealing

with the cultural issue would be tagged as competent. My argument is that common as it is

today, any expanding business in a territory that is not familiar, will always need to go by the

cultural rules, if they want to see some light at the end of the tunnel.

3.7.2. The definition of culture

According to Rogers and Thomas (1999), culture may be defined as the collective

programming of the mind which distinguishes one group or category of people from the other.

In other words culture can be defined as all the ways of life including arts, beliefs and

institutions of a population that are passed down from generation to generation (Rogers and

Thomas, 1999). Culture, which has been dubbed as the way of life for an entire society,

include codes of manners, dress, language, religion, rituals, norms of behavior such as law and

morality, and systems of belief as well as the art (Ibid). As will be discussed later, culture was

deeply embedded within the cases that have been chosen for analysis. That is why it will take

some centre stage in this thesis research.

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3.7.3. The famous Geert Hofstede´s cultural dimensions

There are some dimensions in culture that were suggested by one of the greatest writers and

authors in the field of culture— Geert Hofstede (De Wit and Meyer, 2004:37). Such

dimensions have been worth a mention in this research simply because the process of change is

from time to time affected by cultural values and norms.

Take an example of a company that is expanding in territories where the ways of

running business differ from how it is done in the original country. In this incidence, changes

come about due to the differences in time zones, beliefs of people, attitudes, the geographical

effects, as well as the political systems. Now, the fact is, many of these differences form up

what we may closely relate to culture and the only way to survive in such a different

environment is by adaptation –something that is really very challenging for leaders with

hypothetical definitions; ―transformational.”

De wit and Meyer (2004) argue that Hofstede‘s power distance Index measures the

extent to which the less powerful members of organizations and institutions such as families

accept and expect that power is distributed unequally. This represents inequality that is defined

from below, not from above. It suggests that a society‘s level of inequality is endorsed by the

followers as much as by the leaders (De Wit and Meyer, 2004). Such a view has got meanings

that are depicted from ethnocentrism—the degree to which individuals judge other cultures as

inferior to their own culture, as well as cultural relativism— which is the degree to which an

individual judges another culture by its context (Rogers and Thomas, 1999). For example,

Germany has a 35 on the cultural scale of Hofstede‘s analysis compared to Arab countries

where the power distance highly rockets at 80, and Austria where it is at a low 11. That means

that Germany is somewhat in the middle and does not have a large gap between the wealthy

and the poor but have a strong belief in equality for each citizen. Germans therefore have the

opportunity to rise in society. On the other hand, the power distance in USA is 40 on the

cultural scale, meaning that USA exhibits a more unequal distribution of wealth compared to

the German society. According to Hofstede, as the years go by, it seems as though the distance

between the wealthy and the poor grows larger and larger (De Wit and Meyer, 2004).

As another of Hofstede´s dimension; Individualism, is the degree to which people

prefer to act as individuals rather than members of the group. Collectivism, which is the degree

to which individuals are integrated into groups, is the opposite of individualism (Rogers and

Thomas, 1999). On the individualist side we find societies in which the ties between

The Change Process:


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individuals are loose meaning that everyone is expected to look after one‘s immediate family.

Rogers and Thomas (1999) reiterate that on the collectivist side, there are societies in which

people from birth onwards are integrated into strong, cohesive in-groups, often extended

families with uncles, aunts and grandparents that continue to protect them in exchange of

unquestioning loyalty. According to Hofstede´s scale, nearly all the Western economies are

considered individualistic as compared to developing and poor economies which are

considered to be collectivistic.

Another of Hofstede´s cultural dimensions is masculinity versus femininity, which refers to the

distribution of roles between the genders. Masculinity may be defined as the degree to which

tough values like assertiveness, performance, success and competition, which in nearly all

societies are associated with the role of men; prevail over tender values like the quality of life,

service, care for the weak and solidarity, which in nearly all societies are more associated with

women‘s roles (De Wit and Meyer, 2004: 42).

Uncertainty Avoidance is another dimension that is meant to deal with a society‘s

tolerance for uncertainty and ambiguity. It ultimately refers to man‘s search for the truth. In

this case, uncertainty avoidance indicates the extent to which a culture programs its members

to feel either uncomfortable or comfortable in unstructured situations. Unstructured situations

according to Hofstede are novel, unknown, surprising, and different from usual. Uncertainty

avoiding cultures try to minimize the possibility of such situations by setting strict laws and

rules, applying safety and security measures, etc (De Wit and Meyer, 2004:42).

Long-Term Orientation is the fifth dimension of Hofstede that was added after the

original four to try to distinguish the difference in thinking between the East and West. From

the original IBM studies, this difference was something that could not be deduced. Therefore,

Hofstede created a Chinese value survey which was distributed across 23 countries. From these

results, and with an understanding of the influence of the teaching of Confucius on the East,

long term vs. short term orientation became the fifth cultural dimension. Hofstede´s research

found that long term orientation consisted situations such as persistence, ordering relationships

by status and observing this order, thrift, and having a sense of shame whereas short term

orientation consists personal steadiness and stability, protecting your ‗face‘, respect or

tradition, reciprocation of greetings, favours, and gifts. The grid shows France with a 30 score,

compared to the West African state of Nigeria – 16 (De Wit and Meyer, 2004).

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As we shall envisage in some of the cases that will be dealt with in this thesis,

situations such as the Volvo-Renault merger had a deeply rooted culture problem that played a

role in the failure of the merger for the fact that changing an organization/ business that has a

deep relationship with the culture is so difficult to carry out. Similarly, the HP and Compaq

merger had a huge divide because of the fact that culture was deeply embedded within the

history of HP company—the corporate culture.

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4. THE CONCEPTUAL FRAME WORK

The conceptual frame work is an area that will outline the concepts that are going to be used in

relation to the findings of this research. Although not all the theories, models and concepts that

have been discussed in the theoretical frame work will be used in the final analysis, the

selected ones will be the back bone that leads to finding answers for the research issue.

One the concepts that will be discussed in line with leadership will be John Adair‘s

task, team, and individual. It was chosen due to the fact that all the chosen cases involved a

significant level of relation to the concept. Added to this concept, is Peter Drucker´s leadership

theory that highlights little if any difference between leadership and management by definition

(Drucker, 1999).

Another important area to be discussed in this research is the actors of change and their

behaviours, a reasoning that is got from Wilfried Kruger‘s Iceberg of change

The actors of change and their behaviours

Behaviour

Attitude

negative positive

negative

positivePotential

promoters

Opponents

Promoters

Hidden

opponents

Source: De Wit and Meyer, 2004: 210.

According to Kruger‘s Iceberg as cited by De Wit and Meyer (2004), the different

behaviours and attitudes can easily be managed using either the power and politics

management, or the management of perceptions and beliefs.

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Drawn from Kurt Lewin (1951) theories, the concept of democratic/Participative

leaders will also be used to gauge the level of democracy that availed when the selected cases

happened. According to Kurt Lewin, democratic leaders are ones that do encourage group

members to participate, while retaining the final say over the decision-making process to them-

selves—something that makes group members to feel engaged in the process, hence becoming

more motivated and creative.

The Burke-Litwin model of transformational leadership

Leadership

External

Environment

Organization

Culture

Mission and

Strategy

Individual &

Organizational

Performance

Source: W.Warner Burke, 2002: 202.

Depicted from Burns´ concept on transformational leadership, Burke and Litwin argued that

the above will be affected by changes caused by the direct interaction with the external

environmental forces and will as a consequence require significantly new behaviour from

organizational members (W. Burke, 2002).

Karl Weick´s (1995) sense making concept will also come into play, in trying to

analyze the cases towards the aim of getting the findings. In all the cases, we sill see the need

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of sense making, which originates from the leader‘s realizing, and communicating the vision to

the followers.

Geert Hofstede´s cultural dimensions as depicted from De Wit and Meyer (2004) will

also have an implication within the analysis and findings as seen from the perspectives of

cultural relativism and ethnocentrism.

In the next chapter, the empirical frame work and findings will be presented. A review of the

cases will highlight some interesting views, enabling me to make an analysis that is based upon

the background of the selected concepts.

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5. THE EMPIRICAL FRAMEWORK AND FINDINGS

The empirical frame work in this thesis research will be drawn against the back ground of the

reviews within the conceptual and theoretical frame works. This is aimed at coming up with

findings and conclusions for this research. As earlier indicated in the methodology section

(Chapter 2: 7), this thesis will build its empirical reasoning around secondary sources of

information and reviewed literature that will thoroughly be discussed later as this research

continues to take its course.

Data and information at my disposal comes from a couple of case studies that have

been studied by other researchers in their own different contexts. By applying the same

research design to every case, the research analysis will lead to the findings which will

therefore show a deeper understanding of the issue at hand, hence putting them into a context

to show, as well as throw some light upon the research issue at hand.

5.1. The guiding cases to the research

This research will be based upon two particular merger cases that represent the core values of

change and leadership

1. The HP( Hewlett Packard) - Compaq Merger case

2. The Volvo - Renault case ( failed merger)

The above cases were carefully chosen due to the fact that they will help to bridge the gap

between the selected theoretical frame of references and the results/ findings. Basing upon the

concepts/models with in the conceptual frame, the analysis would in the end lead to answering

the research issue.

5.1.1. Hewlett Packard and Compaq merger case

HP´s history and the merger developments

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The HP and Compaq is certainly one of the most talked about cases in the history of mergers

and acquisitions. This is due to the unprecedented chaos that marred the proceedings and road

map towards the completion of the merger that has even made scholars like my self to grow a

lot of interest, in getting to know what happened during this whole process. As a deep look into

the case is carried out, the proceedings that marred this case deserve a mention as understood

from a perspective. First and foremost, before going deep into the case, a brief description of

the history of HP will be mentioned here under. It should however be noted that instead of

Compaq, HP´s history takes centre stage because of the historical circumstances that surrounds

its foundation.

In 1938, two Stanford graduates in electrical engineering, William Hewlett and David

Packard, started their own business in a garage behind Packard‘s home, formalizing their

business into a partnership called Hewlett-Packard one year later. Incorporating in 1947, HP

began offering stock for public trading 10 years later and annual net revenue for the company

had grown from $5.5 million in 1951 to $3 billion in 1980. By 1997, annual net revenue

exceeded $42 billion making HP the world‘s second largest computer supplier (Hoopes, 2002).

The company, which originally produced audio oscillators, introduced its first computer in

1966. And with a sky rocketing innovative drive, the company pioneered the era of personal

computing by introducing the first scientific, hand-held calculator in 1972. Hewlett-Packard

then introduced its first personal computer in 1980, making it to go a step further in its

innovative drive by introducing the LaserJet printer five years later which would become the

company‘s most successful product ever.

In 1956, Bill Hewlett, Dave Packard, and a handful of other HP executives gathered at

the Mission Inn in Sonoma, California, to create a set of values and principles to guide their

company. They subsequently created the six objectives that helped to shape a new kind of

company and ultimately became the foundation of what was known as the HP way. These six

objectives, which later became seven, are; recognize that profit is the best measure of a

company‘s contribution to society and the ultimate source of corporate strength; Continually

improve the value of the products and services offered to customers; Seek new opportunities

for growth but focus efforts on fields in which the company can make a contribution; Provide

employment opportunities that include the chance to share in the company‘s success; Maintain

an organizational environment that fosters individual motivation, initiative and creativity;

Demonstrate good citizenship by making contributions to the community; and Emphasize

growth as a requirement for survival ( Hoopes, 2002).

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Plans to acquire Compaq were announced on September 3, 2001 by HP´s CEO— Carly

Fiorina. The planned merger would be in terms of a stock transaction valued at US $25 billion.

Moments prior to the announcement, it was believed that the merger plans had grown out of a

telephone discussion between Fiorina and Compaq‘s CEO Michael Capellas in late June of

2001, and talks between the two companies appeared harmonious to say the least (Hoopes,

2002).

Unlike many other amalgamations, HP wasn‘t looking to squeeze Compaq for the best

price and then send its executives packing due to the fact that they wanted something in

relation to the merger of equals. To protect the deal, lawyers added a number of clauses that

would make it hard for either side to walk away— there would be a US $675 million break-up

fee if either side terminated talks without a better offer (Williams et al, 2001). The two sides

further agreed that no matter how much either stock rose or fell, there would not be a

renegotiating price. On her part as a leader, Fiorina travelled extensively around the country in

an effort to garner support for the merger from analysts, investors, and HP employees. Indeed,

it was suggested that HP and Compaq had put together plans for the amalgamation right from

the beginning, going through the post merger integration process – The Clean Room Operation.

The operation comprised 23 separate teams organizing every merger details from computer

system to human resource (Hoopes, 2002).

5.1.2. The Volvo and Renault merger case

History of the alliance and the failed merger

In 1990, the Swedish vehicle manufacturer Volvo AB and the majority state-owned (French)

vehicle manufacturer Renault established a strategic alliance by purchasing shares in each

other‘s automobile and truck divisions. Renault purchased 25% of Volvo Car Corporation and

45% of Volvo Truck Corporation, while Volvo purchased 20% of Renault's motorcar division

and 45% of Renault's truck division (Bruner and Spekman, 1998).

The two companies had an earlier history in relations. It had started in 1971 with a

components swap agreement and then went deeper when Renault purchased some equity

interest – a minority – in Volvo‘s capital in 1980. Those shares were sold in 1985 due to a

close bankruptcy for the French car maker and in 1989, the two CEO´s –Raymond Lévy

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(Renault) and Pehr Gyllenhammar (Volvo) discussed about a potential merger between the two

car maker firms. They publicly declared their intention of creating a joint-venture in

1990(Bruner and Spekman, 1998). The details of this association did not appear until the near

close of the year when it became clear that it was more a strategic alliance in its objectives than

a would-be simple cooperation.

Initially, there were some key factors that prompted the alliances between Volvo and

Renault. First and foremost, both companies had agreed upon a cross share holding by each

firm, coupled with an agreement to unwind the alliance. The terms meant that both companies

would hold shares in each other‘s parent company, thus permitting their CEO´s to sit on each

other‘s board of directors (cross shareholding)—an expression of strategic intent of Renault

and Volvo to co mingle their automotive business (Bruner and Spekman, 1998: 139). Yet

another reason that was ironed out was the equal division of management appointments to the

joint operating committees. The two companies had agreed on the creation of two alliance

headquarters in Paris and Gothenburg, with a choice of English being used as a language of

communication. Though Renault was several times larger than Volvo in cars, the partners

retained an equal voice in the alliance management. While brand loyalty was one of the factors

that were laid, both companies would gain from the synergies of the alliance, hence freeing

themselves to pursue downstream options separately (Bruner and Spekman, 1998).

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Strategic alliance and cross-share holdings as of Sept `93

AB VolvoRenault SA

VCC

VTB RVI

8% ¤

20%

75%

55%

45%

25%

45%

55%

VCC Volvo Restructured car operations

VTB Volvo restructured truck and bus operation

Renault SA Parent Company of the Renault Group

following conversion to a capital stock company

RVI Renault Vehicules Industriels SA

¤ Renault had acquired 8.24% of Volvo shares, and 10% of the votes

Source: Bruner and Spekman, 1998: 139.

In accordance to Bruner and Spekman (1998), noting all the developments between HP

and Compaq which had a highly committal alliance with good coordination, what should have

become one of the biggest and strategic European mergers became a surprising flop.

These developments will be further discussed while analyzing the cases for the required

findings.

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5.2. Case analysis and findings

5.2.1. The basis for motivation to carry out change processes

According to Hopkins (1999), it is not quite certain to be precise about the context around

mergers and acquisitions due to the fact that these operations are always part of the strategy.

There are several reasons driving two companies to merge or one to acquire another firm, and

hence it is observed that there is not one single reason, but a number of factors that explains the

context of such operations (Hopkins, 1999: 210). In accordance to Weston and Fred (2001),

thanks to the acquisition of new resources from another company, the merger can be seen as a

development motive that is meant to cope with the environmental changes. This development

motive usually has its roots from the advantages that synergies would have upon any two

companies that are leaders in their businesses. Some of these resources may either be tangible

(range of products, technological resources, etc) or intangible such as market power, skills and

competency (Weston and Fred, 2001: 84).

In a particular case, HP CEO Carly Fiorina justified the merger in her own way. Even

with the poor reception of the merger idea from Wall Street and industry analysts, Fiorina did

not back down. She argued that the merger would eliminate one player in an oversupplied

computer marketplace. It would also improve HP‘s market share across the hardware line and

double the size of HP‘s service unit. These were seen as essential steps in being able to

compete with the giant in the industry (IBM). In addition, Fiorina argued, the merger would

create a full-service technology firm capable of doing everything from selling computers and

printers to setting up complex networks (Lohr and Steven, 2001).

William and Molly (2001) argue that after HP and Compaq‘s marriage therefore, the

new company would have a new look within the hierarchy in which Carly Fiorina would be

chairman and CEO, while Michael Capellas would become president. All these changes would

mean that HP would reform the employment structure. The combined company would have

about 145,000 employees but the changes would mean that an initial workforce reduction of

15,000 employees would be in effect, although these job cuts would be against the traditional

HP way that was initially a nice tag in the company for a very long time (Williams and Molly,

2001).

Ready to pull off all the stops in an extended bid to win support from the cynics, Carly

Fiorina expressed her views with a strong notion that the merger would eliminate redundant

product groups and costs in marketing, advertising, and shipping, while at the same time

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preserving much of the two companies‘ revenues— a reason that was meant to put both

companies on another economic platform not only much desired for the future economic

strength, but also for a competitive position on the market share. To critics, Fiorina emphasized

that the chief driver for the HP-Compaq merger was competitive positioning where as to those

who questioned the chances that the merger would succeed, she pointed out that the

distinguishing characteristic of successful mergers is the focus on consolidation, not

diversification—exactly what HP planned to do after its merger with Compaq (Hoopes, 2002).

Further still, in a clear justification of the Business Process Re-engineering (BPR)

(Hammer and Champsy, 2003), which has been hinted on in the theoretical frame work. This

radical redesign of organizational processes in order to achieve drastic improvement of current

performance in cost, service, and speed was the very issue that Fiorina argued to sceptics who

resisted changes within the HP way. According to her, the HP way was always about creativity,

change, innovation and bold moves. Although she recognized that the HP way had become

something of a gentle bureaucracy of entitlement and consensus, she emphasized that the

important values of HP‘s culture were the very values that justified the merger (Williams and

Molly, 2001).

In my own depiction from all these timely developments within the history of HP &

Compaq, judging from her own words and thoughts about the motive to amalgamate two of the

leading companies within their respective categories or areas of specialization, Carly Fiorina

together with Michael Capellas did not only display a good sense of leadership, but also a

certain wave of good judgement that true transformational leaders need at the work place if

there is any chance of bringing about change within the organization. Both Fiorina and

Capellas showed great determination to lay out the vision and objectives that both these

companies would proudly carry as a team. A vision, according to how I perceived it, that

carried the waves of hope and strength for the sake of the companies. To this extent therefore,

these two leaders displayed a great deal of competencies that were meant to economically

transform their respective companies to greater heights. In accordance to what I can depict

from Burns (1978) arguments, Carly and Capellas displayed— a textbook character that true

transformational leaders should be able to display within any given challenging situation.

Depicted from Bruner and Spekman (1998), a few thousand miles away from the

developments at Silicon Valley (HP´s home), there had happened the proposed Volvo &

Renault merger, in the midst of the European continent. While enjoying good relations that had

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been created by the strategic alliance, and the growing confidence and trust in the alliance

future, Volvo‘s CEO Pehr Gyllenhammar and Jean-Louis Schweitzer, who became Renault‘s

CEO in 1992, were still looking forward for more integration. The two leaders therefore saw

the merger issue as an obvious way of continuing their relation with the claim that it had

always been the aim of the strategic alliance (Bruner and Spekman, 1998). These two top

executives pointed out three main reasons for the merger: First, it would represent a

competitive advantage in terms of market share because the two companies would have

become the second biggest players in the truck market and the sixth in the car industry. The

second argument was related to cost cutting objectives in terms of procurement, R&D and

production. Finally another reason was related to the aim of achieving a substantial financial

strength, a platform that would carry a lot of weight since this would represent a competitive

edge and readiness to survive any would-be upcoming forces of winds and storms (Ibid).

As far as I am concerned, all these notions and rhetoric are a reminder of the fact that

whenever humans want to achieve something in their lives, they always tend to go an extra

mile for the cause of their needs— the same routes that Gyllenhammar and Schweitzer took.

Surely these developments showed that change is not an easy phenomenon within our societies

to architect, because it brings along with it a mixture of good feelings and emotions. It is

therefore the role of transformational leaders to communicate the vision that is meant to go

down well with the followers. On their side therefore, Gyllenhammar and Schweitzer did what

ever they could to see to it that their message stretched along all the involved parties. Not only

did they do that on their part, but they also did it competently although to the Swedish party, it

could not go down well due to the fact that it touched a nationalistic nerve. But all in all, to

wrap up all the initial stages, credit is deservedly given to those transformational leaders on

their part for showing strength and the courage for passing on the message to their followers.

5.2.2. An overview of transformational leadership in due course of

the merger

According to studies done by Tichy and DeVanna, transformational leadership involves

recognizing the need for change that is on the verge of happening to any given organization.

On the part of organizations and individuals, there is always a tendency of being comfortable

with the status quo hence resulting in resistance of change (Tichy and DeVanna, 1986: 1990).

Such tendencies were deeply rooted within sections of the hierarchy straight to the bottom of

HP and Compaq during the push for their amalgamation. One incidence was when Walter

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Hewlett the eldest son of one of the co-founders, and David Packard, son of another co-

founders rejected Fiorina´s call for the merger to go ahead. Due to this, the merger which had

also been given thumbs up by Compaq‘s CEO—Michael Capellas, was on a brink of failure at

this particular moment in the history of both companies. In accordance to a similar argument

by Bruner (1999), the Volvo-Renault merger received rejection from Volvo‘s share holders

when Pehr Gyllenhammar, chairman of Volvo's board of directors, and Louis Schweitzer,

chairman of Renault‘s supervisory board announced the plan to merge the two companies 6th

September 1993. Most importantly though, the CEO`s from both ends had comprehended the

need to break from the original alliance into a merger— a move that would change the

organization‘s structure into a positively viewed direction (Ibid).

Theoretically, much has been written about qualities and types of leadership (Bass and

Avolio, 1994; House, 1996; Conger and Kanungo, 1998). According to Bass though, theories

of transformational leadership and organizational change emphasize that change is

accomplished through the leader‘s implementation of a unique vision of the organization (Bass,

1985). Adding to such a theory, Bass and Avolio argued that the achievement of such a

milestone would be done through powerful persuasive, personal characteristics, and actions

designed to change internal organizational cultural forms and substance (Bass and Avolio,

1994). Other theorists such as Tichy and DeVanna kept on pumping up the rhetoric that for the

change process to go ahead, it requires the transformational leaders to create a vision, which

acts as a conceptual road map for where the future of the organization will be headed (Tichy

and DeVanna, 1990: 128). A vision according to them is not constructed by a single leader, but

as a result of bringing together the differing view points within an organization.

In both of these selected cases that portray a clear route to change, their leaders—

Fiorina and Capellas, as well as Gyllenhammar and Schweitzer from HP & Compaq and Volvo

& Renault respectively, embarked on walking the talk instead of talking the talk— meaning

that they took a route toward action, for a perpetuated good cause for change within their

companies. As cited by Bruner and Spekman (1998), and Hoopes (2002) respectively, although

these changes were opposed, these leaders had tried their best to strategize and employ good

leadership and management in a dire need for change to take place. It is there fore seen that

transformational leaders are change agents who have the responsibility of pointing out how

change in the environment could positively or negatively affect the organization‘s operation.

As a matter of reflection, as argued by Hoopes( 2002), after envisaging a would-be rejection of

calls for change within the company, Fiorina (HP´s CEO) tirelessly got on board the fast

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moving commuters around the state, garnering support for the merger. As a transformational

leader therefore, Fiorina displayed a high degree of competence and appropriate behaviour

when she rallied calls that successfully changed the status quo in the organization, at a time and

stage that was appropriate in the transformation process.

In accordance to Tichy and Devana (1986), the above behaviour by Fiorina is

tantamount to saying that transformational leaders have to break down old structures and

establish new ones, which may be deep within the political, social, economic, and

technological aspects. By showing competencies, they need to find appropriate followers to

implement new ideas—such as the creation of new coalitions of employees who will be

compatible with the new vision, hence helping individuals find new roles, as different

structures are designed to enhance the new direction for the organization. This was proven

when Fiorina and Capellas undertook the task of developing an appealing vision for the future

of the company, which provided both a strategic and motivational focus, as well as a clear

statement of purpose for both companies.

However, not all these actions illustrate the values for competence because although

Fiorina managed to communicate the vision to the rest of the board members, and the other

stake holders, she did not carry all of them on board for a common agreement. There was an

underestimation of the power and influence that other members had over the future of the

company. In other words, these events showed a lack of competence in portraying Fiorina and

Capellas as a source of inspiration. This draws a conclusion that although transformational

leaders may be truly committed to communicating the vision, they may at the same time fall

quite further down in the inspirational pecking order— a sign that exposes some loopholes in

the performance measurements on their part. As a point of reflection therefore, these dark spots

with in the turn of events could be attached to a number of factors, some of which may be the

nature of leader‘s attitudes and behaviours towards others.

5.2.3. An insight on organizational sense making as a roadmap

towards implementing change

Depicted from my point of view, organizational sense making is a very crucial element for

change agents since it involves employing smart thoughts that should be spot-on when making

decisions, which are meant to be a guide line to the organization‘s daily business and future.

Transformational leaders are ones that easily excel in being proactive when making decisions

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such as organizational change— a tag that I would use as a reference to leaders who think

outside the box when making important decisions.

Regarding the mentioned mergers, on the part of leaders Carly Fiorina (HP) and

Michael Capellas (Compaq), as well as Pehr Gyllenhammar (Volvo) and Louis Schweitzer

(Renault), there are various questions that came along the way, showing strength in the leaders´

sense of judgement, decision making, and being flexible. While I contextualize the unfolding

events, questions such as how does change come to be an event for organizational members?

What does change mean? Etc, came up. In the context of everyday life, when leaders have

something incomprehensible to confront, their unawareness has the force of bringing that exact

event (change) into existence. Continuously, when leaders then ask themselves of what they

should do, this added question has the force of bringing meaning into existence (Weick, 1995).

This means that leaders hope it is stable enough for them to continue acting into the future, as

well as having the sense that they remain in touch with the continuing flow of experience.

This sense of judgement and flexibility was rich when the original purpose of the phone

conversation between Fiorina and Capellas, who had met at a policy meeting in Washington 18

months earlier, was to discuss a possible licensing agreement (Hoopes, 2002). However, their

conversation led to a discussion of competitive strategy and the idea of a merger between the

two companies was broached. By July 2001, the basics of the deal had already been hammered

out, and by the first week of September 2001, the merger had been approved by the boards at

both companies. Hoopes (2002) opines that still in dire need of defending her stand for the

cause of change, Fiorina made numerous travels to campaign for change and create a positive

image against the fast growing number of opponents from investors and employees of the two

companies. As a result of all this, the announcement of the deal had caused stock prices for HP

and Compaq to fall significantly in the months following the deal‘s announcement (Hoopes,

2002).

Changing focus onto the amalgamation proceedings that took place in Europe, although

the price of the B shares of Volvo AB fell to 402 Sek following the announcement of the

merger, Volvo issued important information to the shareholders to explain the proposal and

hence convening an Extraordinary General Meeting of Shareholders on November 9, 1993 to

vote on the merger. (Bruner and Spekman, 1998) As Pioneers of such moves, Pehr

Gyllenhammar and Louis Schweitzer saw the need of acting upon the need that pretty much

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looked strategic considering the performance of their different brands, although their desires hit

the thick rock/ failed (Ibid).

My analysis on such an issue is that from the above proceedings transformational

leaders make sense of the ongoing circumstances within the organization when they

communicate as well as implement the strategies, which they think are the best for the future

survival of the organization. The extent to which transformational leaders portray themselves

as game changers with words of wisdom surely has limits because during the process of

handling those daunting tasks such as communicating the vision of the organization to the rest

of the stakeholders such as employees, customers, legal authorities, environmentalists, etc.,

they at most times fall short of swaying followers that may need a little more convincing to

jump onto the wagon. This, in this case may be due to fear of the unknown, since some people

have a tendency of asking a question like if it is not broken, why fix it? That is why I may say

that much as transformational leaders may be competent in making sense of the situation by

making organized communication, as human beings, they can never be 100% perfect in

competently inspiring the remaining number of the uninspired.

5.2.4. The decision making paradox in a democratic set up

According to what I have realised over the years, one of the biggest advantages that most

people and organizations in developed economies have over the majority of developing

economies is the level of democracy and organisation there is. Most people have clear rights to

express their views and thoughts, freedom of speech, legal access, voting rights, and many

more rights that a human being should have for their voices to be heard, on planet Earth.

That argument leads to the fact that during the most challenging moments of decision

making, the HP-Compaq as well as the Volvo-Renault mergers hit headlines for different

reasons. In accordance to Bruner and Spekman (1998), after the announcement of the would-be

Volvo-Renault merger by Pehr Gyllenhammar— chairman of Volvo's board of directors,

together with Louis Schweitzer— chairman of Renault's supervisory board, the proposed

merger terms meant that Volvo would contribute its automobile and truck corporations to the

merger, while its parent company Volvo AB remained independent. In contrast, Renault would

contribute all its operations to the merger. Two new companies would therefore be formed:

RVC, a holding company and RVA, an operating company. Renault would own 51% and

Volvo AB 49% of the holding company RVC. In turn, RVC would be one of four shareholders

of the operating company RVA. The share ownership structure of the operating company RVA

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would mean that the French government would own 46.36%; RVC 35%; Volvo AB 17.85%

and Renault employees 0.79 % (Bruner and Spekman, 1998).

Democracy at its best therefore was the reason as to why on the 6th

September 1993, the

share holders of Volvo, represented by Aktiespararna, the Swedish Shareholders' Association

(SSA), issued a statement supporting continuing collaboration between Volvo and Renault, but

concluding that a commercial valuation of the proposed merger was difficult to assess, since

Volvo had presented neither profit-based nor valuation-based information (Bruner and

Spekman, 1998). The Swedish Shareholder Association had also noted that the information that

was presented to Volvo‘s shareholders failed to prove that a merger was the best and most

appropriate option for the two companies, questioning the advantage of a merger over an

ongoing strengthening of the strategic alliance between the two companies. Because of this, the

merger failed flatly. The same applies to HP and Compaq, whose employees and investors´

voices of resistance were democratically heard, although the deal to merge went through.

Viewing these developments through a clear glass, such decisions meant that there was

a democratic style of leadership—an indication that decision making was based upon

encouraging group members to participate. In this particular kind of leadership, leaders

retained the final say over the decision-making process which makes group members to feel

engaged in the process, hence becoming more motivated and creative.

A clear analysis of such developments justify the issue of whether transformational

leaders are competent in what they do, as of when the process of change is round the corner,

due to the fact that however much the circumstances may require the opposite, they make sure

that followers have all the information about where their freedom lays. Nevertheless, not only

does democracy work when all factors are constant, but also when there is need to absorb the

message coming from the cynics on the opposite side of embracing the waves of change. My

understanding shows that depending on the political situation in a given economy, most

transformational leaders display a high degree of ability and performance towards outlining

and getting ready for democracy to take its course. To some extent however as were in both

cases, the leader‘s display of propaganda tactics and rhetoric that is meant for opponents to

make choices accordingly has always threatened the course of democracy, which is really a

sign of selfishness and incompetence because it doesn‘t truthfully appeal to a large group.

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5.2.5. Proponent’s desire to un- scratchily walk the talk of change

For any transformational leader in an organizational set up, there is always a desire to

translucently walk a fine line. In accordance to Burns (1978), the resulting need to

communicate the vision of the organization to the anxious followers stems from the motivation

that grows within the leader prior to the announcement of the big plans. In addition to Burns

(1978) work, I opine that not only does that desire depend upon the leader‘s motivation, but

also the extent and diversity of the task at hand. It is therefore certain that different situations

regarding change such as the political, social, economic, legal, etc have always been tackled

using different situational approaches.

Before going deep in the topic of change and its implications, there are quite a number

of areas/ circumstances that are worthy of note. Basing upon the Burke-Litwin model of

change, these may include the external environment, leadership, organizational culture, mission

and strategy, as well as individual and organizational performance (Burke, 2002). As explained

in the theoretical part, the top half of The Burke and Litwin model are drawn from the ideas

and concepts of James McGregor Burns and his distinctive description of transformational

leadership in which he describes transformational leaders (change agents) as ones that bring

about change in the organization (Burns, 1978). The link between change and leadership is

being made by some prominent theorists and one of them is Adair, who argues that there is a

complimentary element between the task at hand, the team, and the individual. In his theory,

Adair illustrates that there is no correct style of leadership, and that this notion of leadership

depends on the task at hand i.e. the challenge that will be faced by the leader, the people in the

team that will effect the realization of the task, as well as the individual character of the leader,

who has a multiplicity of roles such as communication, delegation, strategize, etc. In his

elaboration, Adair clearly states that if at any one point anything happened to one of the

mentioned variables, then the rest will also be affected since they are intertwined and work best

together (Adair, 1996).

Within this particular thesis research, the analysis on Fiorina´s leadership during the

task of merging HP and Compaq, the most vocal resistance came from members of the

Hewlett-Packard families, including dissenting board member Walter Hewlett who argued that

the amalgamation would create a bloated PC business, hence diluting Hewlett-Packard's

lucrative printing business (Williams and Molly, 2001). Similar waves of resistance were faced

by Pehr Gyllenhammar from the Volvo shareholders, against a proposed merger with the

French giants—Renault. For that matter, one of the circumstances that surrounded the Volvo-

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Renault merger was that since Renault was owned by the French government, there was fear

that they would be entitled to hold a golden share, granting the French government the right to

approve or veto any takeover or sale/purchase of a large block of shares. On top of that, the

French government would retain this golden share even after the privatization of Renault. In all

fairness, this sceptic ideology remained in the minds of the Swedish shareholders, and it was

therefore one of the reasons as to why the proposed merger was rejected (Bruner and Spekman,

1998). This shows that there was no complementary relation between the task at hand, the

team, and the individual—citing the fact that the French government may be regarded as a

huge entity that psychologically threatened the ownership rights of the Swedish shareholders.

Putting all these stories in context, had the CEO´s of the mentioned companies

succeeded in persuading those who were pessimistic, it would have been a perfect answer

Adair‘s theory. But the resistance justifies that Adair‘s theory of the task, team, and individual

are meant to be complementary if an organization is to achieve its strategic goal. In yet another

popularized theory on leadership, Peter Drucker suggests that there is little if any difference

between leadership and management by definition. To Drucker, leadership is not about a list of

attributes, as no two leaders will exhibit the same list, nor is it about charisma or some king-

like quality. It is therefore all about delivery of performance, just like management (Drucker,

1999). The author reiterates that effective leaders do not blame others of their wrong doing;

instead they should be aware that it is their responsibility to take care of whatever happens for

the good of the organization.

While working tooth and nail to see through Fiorina and Capellas´s proposed

amalgamation between computer giants Hewlett-Packard and Compaq, events took a new twist

in the face of the two CEO´s when Walter Hewlett, son of one of HP's founders, filed a court

suit alleging irregularities in how shareholders voted on the deal. This suit raised issues about

the process by which Hewlett-Packard solicited votes for the approval of the proposed merger.

According to the suit, Deutsche Asset Management, a unit of Deutsche Bank with 1.31% of

HP's shares at the end of last year, was originally planning to line up 25 million shares against

the merger. But at the last minute, it changed direction giving 17 million votes in favour of the

deal supposedly out of the fear of losing HP's business in the future. In a strongly worded

response though, HP dismissed the allegations as baseless and rendered them untrue, while

getting ready for a spirited defence against the so called false accusations (Hoopes, 2002).

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Having a closer look upon the above analysis, the proceedings are not in harmony with

Peter Drucker´s (1999) suggestion that trust in leadership is very important and must be

earned. Leaders should have the trust, which would make them look good examples towards

their followers. Although followers are not meant to believe whatever leaders say or do, at least

they should believe that leaders mean what they say, for the good of the organization (Drucker,

1999). Transformational leaders should for that matter be in position to convey the message

that is full of trust to their followers, which would in the end create a fit between the followers

and the created vision, added to the needs of all the key players in the organization that is on

the brink of change. If at any given point a leader communicates a message that falls short of

the trustworthy seal of approval, he/ she would be rendered undependable— a tag that is on the

opposite side of being reliable or competent. This therefore shows that not all transformational

leaders are good in what they do. However much the vision is well communicated to the

followers, the concept of being transformational may lack a strong base if attributes such as

honesty, trust and being reliable are missing. Having these attributes in play will therefore

always be of an added advantage i.e. it will put the icing on the cake.

5.2.6. Calls for transformation as a precursor to resistance

According to Kruger‘s (1996) argument, whenever change looms around the corner, there will

always be resistance towards it. People who are always cynical towards change have different

reasons as to why they choose to take that stand. Citing from Bass‘s (1985) argument, through

idealized influence, transformational leaders therefore are the ones who should have the mettle

to see to it that opponents are convinced to have a paradigm shift from their cynical ideologies

to having faith and belief. The implementation of organizational change is a phenomenon that

always finds huddles and problems along the way. Basically, there have always been two

developing approaches towards the implementation process. One of them is the participative

approach that assumes that employee support is a pre-requisite of change, and the other one is

the unilateral approach which argues that behavior must be changed first, followed by attitudes

of employees. For this matter, Wilfried Kruger‘s (1996) study of different change episodes

indicates that unilateral implementation approaches are more effective than participative.

According to this great academician, the implementation activities content largely depends on

the depth of change, which is evident where behavioral-social change types generates more

support from the employees than technical-structural changes (Kruger, 1996).

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In accordance to Lohr and Steven (2001), as both HP and Compaq had been hurt by

price wars in the computer industry, the merger seemed at least to Fiorina and Capellas—the

perfect way for the new company to differentiate itself and to become more competitive.

However, initial scepticism was met by investors and employees of the two companies, causing

stock prices for HP and Compaq to fall significantly in the months following the deal‘s

announcement. Critics of the merger cited a long list of problems with the deal. Some of these

opponents believed that rather than accelerating growth, merging the two companies would

simply create a bigger company with bigger problems (Lohr and Steven, 2001). To other

opponents of the amalgamation, there was belief that competitors would try to swoop in and

get solution providers and customers to switch allegiances and product lines. Some had also

wondered how HP would hold onto loyal Compaq customers if the Compaq logo were to

completely disappear (Ibid). All this being said, as more resentment grew though, others

worried about the difficulty of blending the two large organizations and their workers (Hoopes,

2002).

Conceptualizing Kruger‘s (1996) model, a strong visualization of dealing with barriers

to change, the relation of transformational leadership with Kruger‘s Change Management

Iceberg model illustrates that transformational leaders need to deal with a great deal of barriers

if at all there is genuine need to communicate and implement the unprecedented or once failed

change in an organization (Kruger, 1996). Clearly bringing his message home, Kruger

indicates that transformational leaders/ managers who may play a role in influencing the

implementation of change may have to conduct an assessment upon the attitudes and

behaviours of the organization‘s employees, hence exercising competence. Looking closely at

the HP and Compaq case therefore, there were a lot of opponents and hidden opponents

towards the need for an amalgamation that would lead to change. For instance On September 3,

2001, Walter Hewlett had initially voted with the rest of HP‘s board in favour of the proposed

merger, with great concern about how the deal would impact his family‘s charities (Lohr and

Stevens, 2001). But just days before the vote, he learned that the merger agreement called for

unanimous board approval in order to ensure the best possible shareholder reception. Hewlett

had a belief that the board would find a way to approve the merger regardless of how he voted,

and that is why he initially cast his vote in favour of the deal. However, as stockholder

rejection would be one of the few ways to terminate the deal, Hewlett‘s announcement—that

he, along with his sisters and the William and Flora Hewlett Foundation, would vote their

combined 5% stake against the deal came as a heavy blow to Fiorina, Capellas, and other

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proponents of the merger (Hoopes, 2002). Although the HP board had succeeded in getting

Hewlett‘s signature, they had failed to win genuine support for the deal. With his name and the

huge stake he and his family had as shareholders, Hewlett‘s disapproval of the deal not only

posed a serious threat to the deal itself, but also the future of the main force behind the deal—

Carly Fiorina.

Another opponent of the merger was David Packard, who issued a statement siding

with Hewlett in opposition to the deal. In a statement, Packard, chairman of the Packard

Humanities Institute, stated that he would vote the Institute‘s holdings (1.3% of HP‘s shares

outstanding) against the deal (Williams et al, 2001). Although he emphasized that he was not

speaking for other family members or for the David and Lucile Packard Foundation, his

decision to oppose the merger left the deal on even shakier ground than before. With the

Packard Humanities Institute opposing the deal, chances that the David and Lucile Packard

Foundation would also decide to vote its 10.4% stake against the deal seemed more probable

than ever ( Williams and Molly, 2001).

In relation to Kruger‘s (1996) model, momentum for the opposition of the proposed

Volvo and Renault merger grew from the Swedish side when the two auto mobile makers

disagreed while carrying out the P4 Project which was meant to create a new common platform

that would have supported the development of a high-end executive car. As many as 200 to

300 engineers were occupied by it, facing a lot of difficulties in achieving their objectives.

Proud of their styling, and their engineering and safety, the French and the Swedes respectively

were concerned about the type of engine that would be used. French engineers favoured a

front-wheel drive car, while and the Swedes strongly defended the use of a rear-wheel drive,

similar to the German cars. In the unfolding events at last, Volvo‘s purchase of a V6 engine

from Mitsubishi with whom they had a joint-venture did not go down well with the French

(Bruner and Spekman, 1998).

Kruger‘s (1996) model as explained conceptually and theoretically illustrates that

opponents of change are negative in both their attitudes and behaviour. In his sharp and well

understood solution, Kruger underlines that such people‘s attitudes towards change could be

best controlled by the management of perceptions and beliefs. In real life therefore, such

perceptions and beliefs may be in form of inducements, incentives, etc. Similarly, hidden

opponents as depicted from Kruger‘s Iceberg of change model are ones that have negative

generic attitudes towards change, although their behaviours have a positive indication and

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support for change. While motivating his argument therefore, Kruger once again clarified that

in case any manager is faced with such opportunists, the best approach to such a situation is

again through the management of perceptions and beliefs, supported by information (issue

management) to change their attitudes (Kruger, 1996).

The analysis of the above developments show us that the proponents of change (Fiorina

and Capellas) in the Hp-Compaq case flatly failed to convince the family members due to the

fact that they lacked political competencies. In any given organization that has a democratic

setup, it is always visibly seen that the rules of the game have to come into play for

transformational leaders whenever there is need for change, as it was envisaged in the HP-

Compaq case. Fiorina especially, since the family members had tagged her undependable a

character, it showed that she did not tally quite well with the politics that surrounded the Hp-

Compaq merger. Although the merger went through which was a good sign to her side, the lack

of political competencies missed in her appeal and that is why she was later sacked as CEO of

HP. Added to that, since theories about transformational leaders show that they are charismatic

and influential, its not certain that they will convince every one that is under their control—a

belief that this research has found. All the leaders in these change phenomena lacked the

negotiating competencies that are meant to convince the rest of the group members for the

desired change in the organization.

5.2.7. Resistance as depicted from the cultural perspective

“A nation's culture resides in the hearts and in the soul

of its people” -Mahatma Ghandi

It is surely of no wonder that culture played its role when both the mentioned merger

cases were taking place. As cited by Hoopes (2002), corporate culture was purely rich within

the HP and Compaq merger, where as the nationalistic culture was truly embedded within the

circumstances that surrounded the proposed Volvo and Renault merger, as cited by Bruner and

Spekman (1998).

As seen from the cultural perspective, ethnocentrism—which is a commonly used word

in circles where ethnicity, inter-ethnic relations, and similar social issues are of concern, is the

degree to which individuals judge other cultures as inferior to their own culture (Rogers and

Thomas, 1999). Similarly, it is a feeling within individuals who think that one's own group's

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ways are superior to others, or rather judging other groups as inferior to one's own. This feeling

usually leads to false assumptions about cultural differences due to the fact that people use

their cultural norms to make generalizations about other people‘s cultures and customs. As for

the case of business management though, such generalizations lead to misjudgement of other

people, hence affecting cooperation, communication, and good coordination.

As mentioned above, there is no wonder that cultural values played a significant role

within the Volvo and Renault merger to the extent that the support for the merger in Sweden

was clearly insufficient in expecting a true commitment with Pehr Gyllenhammar‘s objectives

from Volvo‘s stakeholders. The proposal touched a nationalistic nerve (in the Nordic country,

as the brand of Volvo was considered as a national symbol by the Swedes (Bruner and

Spekman, 1998: 143). As a consequence of the decline in support, Volvo‘s share price started

to decline dramatically. To put more petrol in the fire though, even Swedish workers

announced that they would vote their shares against the proposal, which therefore led Volvo‘s

top executives to urge the board to drop the merger proposal after a meeting in their CEO‘s

house in November, which led to 25 of them to sign a letter rejecting the merger. Finally,

affected by all this pressure, the board withdrew the proposal on December 2, 1993. On

February 17, 1994, after Volvo changed its board of directors and coming up with a new

strategy on selling all non-core assets by 1996, Renault and Volvo declared the dissolution of

the strategic alliance (Bruner and Spekman, 1998). But prior to the cancellation of the merger,

there always were some incidences and wrangles that created unease, especially from the

Swedish side. For instance reports in some newspapers stated that in times of conflict, Renault

engineers usually slipped back from speaking English (agreed language) to French, something

that led the Swedes to perceive it as a way of rejection. Yet another point that created un-ease

was that Renault, the largest shareholder in Volvo AB, appeared to be using its status to

influence a decision on a merger with itself—the sort of levelling and internal bickering that

led to a potential conflict of interest (Bruner, 1999).

Cultural change challenges from the HP and Compaq merger were largely based on

HP´s engineering and compromise, where as Compaq had a hard-charging sales culture. These

cultural values were deeply rooted within both companies at a corporate level. For instance one

of the sources of this deep corporate culture had origins from 1956, when Bill Hewlett, Dave

Packard, and a handful of other HP executives gathered at the Mission Inn in Sonoma,

California, to create a set of values and principles to guide their company. The six objectives

that this small group subsequently created, not only helped shape a new kind of company, but

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also ultimately became the foundation for what came to be known as The HP Way (Hoopes,

2002).

Relating to the famous Geert Hofstede, the three specific dimensions of

transformational leadership— charisma, individualised consideration and intellectual

stimulation (Hofstede, 1980a, 1991) have been examined in relation to differing culture values

maintaining that all three dimensions would be congruent, more easily facilitated, and as well

as more easily transmitted to followers in collectivist cultures than in individualist cultures

(Jung et al. 1995). The dimensions however seem not to tally pretty well with what happened at

Silicon Valley, since the American Culture is individualistic (Hofstede, 1991). According to

Walter Hewlett, Carly Fiorina had exaggerated the importance of scale in the computer

business, arguing that rather than make the company more competitive, the merger would

expose HP to the brutal, low-profit PC business, and significantly dilute the value of the

company‘s lucrative printing business (Williams et al, 2001). Following Hewlett‘s lead was

Packard – the oldest son of the other late co-founder, who also claimed that Fiorina‘s high-

handed management and her efforts to reinvent the company ran counter to the company‘s core

values as established by the founders. From this, he cited massive layoffs as an example of this

departure from HP‘s core values, arguing that although the founders never guaranteed job

security, they never developed a premeditated business strategy that treated HP employees as

expendable (Hoopes, 2002).

Still, another culturally rooted reason for the opposition to the merger was that family

shareholders, who often have large holdings in the family‘s company, disliked risk more than

most other investors. For the families of HP founders William Hewlett and David Packer

therefore, the incentive to preserve wealth rather than to create it was especially as strong as

their HP stocks finance donations to numerous worthy causes. These causes include the

Packard Humanities Institute, the David and Lucile Packard Foundation, and the William and

Flora Hewlett Foundation (Williams and Molly, 2001).

According to Rogers and Thomas (1999), right to the opposite side of ethnocentrism is

cultural relativism, which is the degree to which an individual judges another culture by its

context. This may mean having the view that individual beliefs and values systems are

culturally relative. In other words, no one ethnic group has the right to say that their particular

system of beliefs and values are in any way superior to others. In this particular context, what‘s

right for one culture might be wrong for another because there is no absolute standard of right

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and wrong used to compare and contrast morally contradictory cultural values (Rogers and

Thomas, 1999). Cultural relativism on its part leads to creation of good communication,

coordination, and cooperation. That is why to an extent, in accordance to Bruner and

Spekman´s (1998) opinion, The French government showed good leadership when they invited

major shareholders of Volvo AB to Paris to meet with Renault supervisory board chairman

Schweitzer, although the Swedish Shareholders Association were not included in the

delegation due to their staunch opposition to the merger. In another attempt though to try to

bridge the visible gaps, the French Minister of Finance Edmond Alphandery and Minister of

Industry Gerhard Longuet wrote to Volvo‘s Chief Executive Officer (CEO) Soren Gyll and

Chairman of the Board of Directors Gyllenhammar emphasizing that the French government

would not use the golden share against Volvo. The French Premier Edouard Balladur also

provided an additional guarantee that Renault would be privatized within one year following

the completion of the merger (Bruner and Spekman, 1998).

In my own view, it is certainly incredible to write off Geert Hofstede´s cultural

dimensions. What ever the case anyway, as a proponent of the Hofstede´s views, the strong

belief is depicted from the notion that as long as anything is variable, just like– behaviour and

attitudes are, then any conclusions could also either stand in favour of such views or stand

against them, until proven otherwise. Depending on what perspective it is viewed, such

concepts could really be good for education, since it leads to continued debates.

A personal comment from such happenings is that since culture is a very important

phenomenon in all societies, considerations should be carefully made when dealing with

situations that are attached to it. It is surely true that culture is rich in religion, politics, human

beings, businesses, tribes, management, education, etc. For sure, the list is endless. Now that

this fact is known, transformational leaders should there fore be prepared to face the challenges

that come with it. According to my own frame of reference that is extracted from cues of past

experiences, culture is surely a strong rock that can not easily crack because not only is it

embedded within people‘s beliefs, but also in their norms and values. Conclusively,

transformational leaders that face resistance from their followers due to cultural values will be

termed as lacking the skills and abilities to persuade that exact demographic for a common

cause.

The analyses of the cases produced a finding that when dealing with cultural issues,

there is no need of being divisive or make trouble for personal gains. Instead, leaders need to

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be calm, restrain necessarily, and slowly monitor the developments in a given situation. To a

certain extent, most transformational leaders lack the international social-cultural knowledge

of how to deal with people from different backgrounds. This exact element has led to the cause

of many problems in society because however successful transformational leaders may be in

their field of competence, they will lack the ability to have a great command if they do not

have inter-cultural knowledge as well as the value towards the culturally rich corporate

organizations for the goal of reaching out to a diversified target group.

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6. CONCLUSION AND VISION

6.1. The research conclusion

As human beings living on planet earth, the changes as well as challenges that we face and

expect are very broad. As it has been researched by different practitioners and researchers, the

processes of change have happened in our daily lives, schools, churches, in politics, in

businesses, in human growth, the environment, as well as many other areas that have been

transformed. Although the elements of change differ from one another, the most important

aspect that is worth mentioning is that the onus is heavily on the leader‘s side to see to it that

these changes are well managed to the tune of their liking, as well as their follower‘s desires.

Thus going this far however, it means that as change agents, to be branded as transformational

puts them on an apex, against all the odds to lead by example for the cause of change. As part

of the game therefore, communicating the vision, delegation, motivation, etc come into play for

the followers to react positively to the message. Now, the more such duties and tasks walk a

fine line then the better for the leaders because as a matter of compliment, their names would

have an initial appearance within the record books for being dependable, competent, and all the

wonderful name tags any one in such a position would dream of. However, as discussed in this

research, the reverse is true for ones that are viewed from the opposite perspective.

Transformational leaders have to thoroughly prepare a background that links their leadership

and the change that lingers around the corner.

While trying to answer the extent to which transformational leaders employ the

required competencies, this research was based on the available methods that were needed to

screen out some results. The use of secondary sources to find out if there were any positives as

well as negatives during the course of these change processes was employed. Literatures from

books, articles, journals, as well as websites were the main sources. In my view though, the

findings showed that for any transformational leaders to be competent, there would be need to

tackle the most important areas in change such as gathering information about the cultural

values of people and organizations, being able to be politically involved, making sense of

crucial situations, weighing the economic situation, analyzing the technological strengths, and

envisioning the geographical location. However, all these processes are never easy to achieve

because of the up hill task that is involved. And the findings showed that these mentioned

uphill tasks were in place along the political, social-cultural, economical, technological, as well

as many other aspects.

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To sum up all the above, the research carried out on the selected cases yielded results

which showed that to a certain extent, although transformational leaders exercise competence,

there is a reasonable number of shortcomings during the process of implementing change.

6.2. The vision for future research

The vision and implications for future research was emanated from the findings as well as the

interesting cases that were dealt with in this thesis research. The areas below left me with

nothing but the motivation to do more research.

One of the areas that could be of interest is the self factor in the organization or

company. Due to the fact that all organizations are run by leaders whose attitudes, values,

ideologies, beliefs, as well as cultures are different, there is need to find out whether most top

leaders make the vast majority of decisions in an egocentric manner, under the pretext to

achieve the organization‘s vision and common values.

The gender issue in leadership and management is another area that would be worth a

target for future research. Surely, this is a topic that I am sure would produce a lot of findings

and answers because of the higher chance that unlike attributes like behaviour that can easily

be variable, gender is a constant. The role of women in particular would be a topic of

consideration, in search for a gender balance.

The transfer of knowledge to developing countries would also be a topic to consider for

future research. Due to the imbalances there is between developed and developing countries,

there would be the need to outline the motives for knowledge transfer, the pros and cons, as

well as the extent to which it could best be done.

Another area that has created huge interest is the strategic positioning, particularly in

Africa. When business minded people talk about companies making huge sums of money,

there is always a question as to why. In a modern ―dog eat dog‖ era therefore, having a huge

cake on the market share would mean strategic expansion to markets and economies where

resources are in abundance, and that is Continent Africa. So, if fast developing countries like

China are taking up the opportunities, it would be similarly good if The West followed the

lead, or increased the effort. For that matter, research aimed at this would involve finding the

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competitive areas, added to the strategies that could be put in play since there is a cultural

difference

“As for accomplishments, I just did what I had to do as things came

along” —Eleanor Roosevelt

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The Change Process:


A

APPENDIX

Appendix 1:

Table 1: Elements of difference and Complementary between Volvo and Renault

VOLVO RENAULT Home country/ region Swedish; Scandinavian; Anglo-Saxon French; Latin; Continental Europe

Language Swedish; English dominant 2nd

language French

Ownership Investor-owned State-owned

Size/position Small niche-player in small cars, Large, broad product line player.

In heavy trucks weak in heavy trucks

Core values and Safety, Engineering Styling, Cost management

Competencies

Management Structure Decentralized; easy flow of information centralized; formal flow of

Information

Market orientation Scandinavia, North America, Asia Continental Europe

Source: Bruner and Spekman, 1998: 138

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B

Appendix 2:

Table 2: The Share Price Indicator, 1998—2007.

Source: Deal Journal, 2007

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C

Appendix 3:

Table 3: The vote for various institutions in the HP-Compaq Merger

Source: Luisa Beltran, 2002(CNN/Money)

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D

Appendix 4

Table 4: Leadership of the combined company

Carly Fiorina,

chairman and CEO

Webb McKinney and

Jeff Clarke,

integration office

Michael Capellas,

president

Bob Wayman,

chief financial officer

Vyomesh Joshi,

printing and imaging

Duane Zitzner,

access devices

Peter Blackmore,

IT infrastructure

Ann Livermore,

services

Source: Hoopes, 2002.

The University of Kalmar

The University of Kalmar has more than 9000 students. We offer education and

research in natural sciences, technology, the maritime field, social science,

languages and humanities, teacher training, caring sciences and social service.

Our profile areas in research are: biomedicine/biotechnology, environmental

sciences, marine ecology, automation, business administration and informatics, but

we have research proceeding in most subject areas of the University.

Since 1999, the University of Kalmar has the right to accept students in

postgraduate studies and to examine doctors within the subject area natural

sciences.

Baltic Business School,

at the university of Kalmar

Visiting address: Kalmar Nyckel,

Gröndalsvägen 19

SE-391 82 Kalmar, Sweden

Tel: +46 (0)480 - 49 71 00

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