DOC

Turnaround Strategies for Troubled Organizations and Organizations

By Lori Cooper,2014-08-12 19:50
29 views 0
Turnaround Strategies for Troubled Organizations and Organizations ...

    Turnaround Strategies for Troubled

    Organizations and Organizations in Trouble

    By Dr Austin Uwandulu

Introduction

     Man is born free, but everywhere he is in chains”. This statement by

    Jean Jacques Rousseau (1712 1778) a French political philosopher,

    captures the realities of life of individual persons and organizations. Competition, disequilibrium and rebalancing have become inevitable tools and techniques that organizations human and non-human employ for

    existence, survival, growth and development.

     History of organizations is replete with the rise and fall of many great organizations. Empires have risen and fallen. Nations have risen, fell, rose again and fell. Business organizations do rise and fall. Economies do rise and fall in cyclic trends like the one the world is currently witnessing. Globally, strategic leaders are concerned with turning around the fortunes of their national economies. Subtly, most nations are seriously strategizing for the new world orders of the 2020 era, 2050 era and 3000 era. They anticipate being troubled by environmental forces and accordingly are preoccupied with anticipatory turnaround strategies. In Nigeria, drivers of governance are strategizing so that Nigeria will be a major player in the global scene. Nigeria, as an organization, has seen good times, bad times and ugly times. The hope is strong that the good times will come again. Indeed it will come if and only if proper turnaround strategies are applied. What are these strategies? What troubles, actual or anticipated, have necessitated those strategies? Could it be that Nigerian leaders did not recognize and manage the avalanche of issues that threatened the nation? Could it be that the neglect in dealing with the threats led to the problems the nation is enmeshed in? What are the consequences of such neglects? How will the issue be dealt with in future?

     Addressing these questions and more specifically indicating the direction of research that will strategically and systematically study the Nigerian organization as well as other organizations that are facing troubles or are in trouble already is what this paper seeks to present. Call it depression, call it global economic melt down, call it bubble busting, one thing is clear, there is a systemic failure that requires deep knowledge of

     1

    strategic change and turnaround strategies. Nigeria, in particular needs this critical knowledge to return the nation to the path of meaningful development. Right now, strategic changes are taking place globally creating ripples with synergic and contagion effects at the same time. If we in Nigeria cannot take advantage of the synergic effect of the ripples, we must at least contain the contagion effect. This is why the study of turnaround strategies has become both timely and imperative.

     Unfortunately, the fields of strategic change in general and turnaround strategies in particular are too wide to be covered in a single research paper as this. There are too many perspectives and the embryonic state of empirical research in these areas of study makes it presumptuous to embrace and project exclusively any one viewpoint. Since each perspective contributes usefully to the overall field of strategic change, the scope of this paper has been limited to setting the necessary research agenda by simply indicating and specifying models that will capture turnaround strategies holistically for troubled organizations and organization in trouble of which the Nigerian organization is a glaring example. It is hoped that in the next few years, empirical research in governance, leadership and management will be directed at covering the fields of strategic change and turnaround strategies.

Literature Review

     To understand and appreciate the concept of “troubled organization”

    and “organization in trouble”, it is necessary that we review some terms that are tangential to turnaround strategies in organizations. Four terms that are very germane will be reviewed here. They are

    (i) Structure of organization

    (ii) Strategic change

    (iii) Troubled organization versus organization in trouble

    (iv) Turnaround strategies

Structure of Organizations

    The systemic nature of current global economic meltdown demands that global organizations are captured in a structure so that troubled organizations and organizations in trouble are identified holistically in ways that make analysis possible and easy. This is presented in the diagram below.

    FIG 1

     2

    STRUCTURE OF ORGANIZATIONS

     Societal Organization

     United Nations Organization Super Global Multi-Lateral Organizations Structure Regional Organizations and Sub- regional Organizations Level National Organizations Organizations State and Local Government Council Organizations

     Political Society Business Society Tertiary Public Society Organizations Organizations Level Organizations

     Organizations

    Secondary Civil Society

    Level Organizations

    Organizations

     Foundation Family Level Organizations Organizations

    Family Organizations

    Family organizations, the smallest unit in the structure of organizations in

    any polity, is the least reported in strategic change literature. Yet it is the

    microcosm of all organizations in the society. Values and practices are

    formed, nurtured and developed at the family level of organization. Real

    growth and development in any society begin and are reflected there.

    Conversely, family organizations are the most vulnerable in societal threats

    and troubles. Therefore strategic change in the polity must necessarily begin

     3

    with the identification and resolution of troubled families and families in trouble.

Civil Society Organizations

    Organizations at the civil society level are, in this paper referred to as secondary level organizations. They serve as the bridge between the foundation level organizations families and the corporate organizations.

    It is at this level that values and practices, formed and developed at the foundation level, are refined. Civil society organizations provide intermediation services services which neither family organizations nor

    institutions in the tertiary levels of organizations (government organizations, political organizations and business enterprises organizations) are able and willing to provide affordably and in the right quantities. On this score, the civil society organizations serve as shock absorbers to the problems of other organizations in the society. Unfortunately, studies in strategic change have not adequately addressed issues pertaining to troubled civil society organizations and the troubles they often are engaged in.

Tertiary Level Organizations

    Tertiary level organizations are categorized into three. Public society organizations that provide public (common) goods and services, business enterprises organizations that provide business (for profit) goods and services, and political society organizations that provide power sharing and prioritization services, jointly reflect the driving force of organizations in the polity. When they are troubled, the polity is inevitably troubled. When they are in trouble, the entire polity is also in trouble. Interestingly, the three categories of organization are intricately connected. Thus troubles in any one of them are likely to infect the others. Therefore, studies in turnaround strategies must incorporate the cross-sectional influences of strategic change at this level of organizations. Studies in turnaround strategies have largely been focused on business dimension of organization. For example, Mark Goldstone (1992), in his “The Turnaround Prescriptions” employed the

    marketing dimension of a business organization to present theories in strategic change. There is need, especially with respect to the Nigerian organization of today, to expand the scope and dimension of studies in strategic change to encompass all categories of organizations in the system.

Super Structure Level Organizations

     Super structure level organizations are societal organizations. They provide the macro framework for other organizations to exist and perform their roles. Thus they facilitate or constrain development at lower levels of

     4

    organizations. Depending on their state of health, (strategic or operational health,) they pose the greatest threat and inflict the greatest dosage of trouble to organizations below them.

     Super structure level organizations include

    (i) United Nations Organization and its agencies

    (ii) Global multi-lateral organizations like the World Bank and

    International Monetary Fund (IMF)

    (iii) Regional organizations like European Union and African Union.

    (iv) Sub-regional organizations like ECOWAS

    (v) National organizations like the Federal (central) Government

    (vi) Local organizations like State and Local Government

    organizations

    Strategic changes in these organizations are, no doubt, the primary source of environmental troubles for organizations below them. Therefore, studies in turnaround strategies for troubled organizations and organizations in trouble cannot be comprehensive unless and until these super-structure organizations are captured in strategic change literature.

Strategic Change

     Change, no doubt is inevitable in life. Infact it is now accepted that change is a constant phenomenon that organizations must live with. But changes come in various forms and dimensions. Likewise the strategies for tackling changes do vary. When a change affects critically, the entire organization, and not just part of it then that change is labelled strategic change.

Sources and Types of Strategic Change

    There are two broad sources and types of strategic change: The first is a change induced by the organization itself. This is known as deliberate

    change. As Snow and Hambrick (1980) have noted “strategic change occurs

    only when the organization (1) modifies in a major way its alignment with the environment and (2) substantially alters technology, structure and process to fit the new alignment.”

     Strategic change in this approach involves changes in an

    organization‟s scope, resource deployment, competitive advantage and

    synergy that align the organization suitably with a changed environment (whether internal or external) so as to allow that organization meet its objectives. It entails translating strategy into action for the organization‟s transmutation.

     5

     The second source of strategic change is the environment itself. In this case changes in the environment fundamentally alter the equilibrium on which strategic moves are based. In this way, environmental changes either pose threats or directly create problems for organizations. We labelled this as emergent change.

     The difference between deliberate and emergent types of change has been provided by Mintzberg and Waters (1985) in their concept of management intentionally where they explain that deliberate change is

    planned for while emergent change is “imposed” by environmental forces.

Effects of Strategic Change

     Flowing from the above postulations, strategic change has two dimensional effects. First, the emergent changes, that is, changes in the environment, pose serious threats to organizations and in the process transform them into “troubled organizations”. Second, the threats, if not

    properly managed may become real problems for organizations and so transform them from troubled organizations to actual organizations in trouble. It is in the process of responding to these troubles either reactively or proactively that organizations intentionally, deliberately or planfully induce strategic change to solve existing or perceived problems in the manner advocated by Snow and Hambrick (1980).

     Strategic change therefore is key to understanding how troubled organization and organization in trouble strategize to turnaround their predicaments

    Concept of Troubled Organizations and Organizations in

    Trouble

     On the face of it we may seem to be playing with words (semantics) when the terms troubled organizations and organizations in trouble' are

    flaunted in board room arguments. In reality, the terms are distinguishable.

     An organization is troubled if its existence, survival or growth cum development is threatened by either external or internal forces. Such threats must be warded off or effectively managed. Failing to do so leads the organization into crisis situations, then turmoil, thereafter catastrophe. An organization that finds itself in this situation is garbed as an organization in

    trouble.

     Thus the difference between “Troubled organizations” and

    “Organizations in trouble” lies in the strategy for and management of the threats. The nature of the terms and the relationship that subsists between

     6

and among the terms are indicated in a model for Turnaround Strategies

    Analysis presented below as FIG 2.

    Fig 2

    A MODEL FOR TURNAROUND STRATEGIES ANALYSIS

     Troubled Organization

    (Organization confronted

    with environmental

    threats.)

     Threats not well Organization in Trouble Crisis

     (Organization battling managed leads to Turmoil

     Catastrophe real time problems.)

    Strategies

    Strategies for Forms Stages of Levels of of Organizational Development Operational

     Strategies Operation Strategies

    Family Organization Operational Level Formation Strategies Strategies Strategies Civil Society Functional Level Growth Organization Strategies Strategies Strategies Business Organization Business Level Maturity Strategies Strategies Strategies Political Organization Corporate Level Decline (end Strategies Strategies game) Public societal Societal Level Troubled organizations are by nature organizations that are facing threats Strategies Organization Strategies Strategies occasioned by environmental changes. The threats need to be managed with Super Societal Structure

    any of the following strategic moves (positioning). Organization Strategies

     Cooperative moves

     Collaborative moves

     Confrontative moves Cooptive moves (reserved for strong players)

     Matching moves

    Sun Tzu, has detailed in generic terms, how these moves can be applied to

    ward off threats.

     In recent times, strategists have attempted in seminar sessions to

    develop and analyze strategies for “troubled organization” along the line of

     7

    (i) Threat strategies

    (ii) Pre-crisis strategies

    (iii) Pre-turmoil strategies

    (iv) Pre- catastrophe strategies.

    However, when threats are not well managed two set of consequences may arise. The first consequence is that the initial environmental threats may degenerate into crisis, turmoil and eventually, catastrophe. The second consequence arises when crisis, turmoil or catastrophe is not nipped in the bud thereby infesting the organization with real-time problems.

     For example, the Nigerian organization, for a long time faced a number of threats which degenerated into crisis that have turned Nigeria into an organization in trouble as exemplified by the following postulations:

     Because threats to our basic values and culture were unattended to,

    they degenerated into value erosion and today Nigeria is an

    organization in trouble with endemic corruption.

     Because threats to our economy through corruption were neglected,

    the threats degenerated into infrastructural crisis and today what was

    once a corruption troubled Nigerian state has become a nation in

    trouble in almost all areas of growth and development

     Because threats to Nigerian nationhood were neglected by not

    addressing issues of self reliance and self sufficiency, crisis of

    confidence and allegiance to the nation crept in and today Nigeria as

    an organization is in trouble with kidnappers, religious and political

    rioters.

Organizations in Trouble

     While troubled organizations are conceived as organization facing environmental threats, organizations in trouble are those organizations living with and battling troubles. No type of organization, or stage in organizational development, or level of organizational operation is immune to troubles. Consequently, general and specific strategies are being developed for each category of organizations in trouble.

Turnaround Strategies

     If turnaround simply implies a reversal of a threat or fortune, then turnaround strategies for troubled organization and organizations in trouble requires that strategies must be crafted in two dimensions; first to reverse the

     8

    threats troubling an organization and secondly to deal with the real time troubles that an organization is currently battling.

Turnaround Strategies for Trouble Organizations

     As noted earlier, troubled organizations have the hostile environment (external and internal) to contend with. Therefore, to reverse the threats imposed by environmental forces demands that strategies must be crafted to deal with the environmental forces themselves. It is customary to categorize the environment according to its political, economic, social and technological components. These components or variants of them are bases for developing counterbalancing forces against threats to an organization.

     Of course, it must be noted that the shape that each component of environmental force assumes differ according to (1) level of operation (2) types of organization (3) form of operation, and (4) stage of development as depicted in the diagrams at Fig 3 and Fig 4 below.

    Fig 3

    Dimensions of an Organization

    (Levels, Types and Form)

Levels of Operation

     Societal

Corporate

Business

     9

     Functional

     Operational

     Type of organization

     Form of Operation

     Super Structure Organization

     Political Society Organization

     Public Society

     Organization

     Business Enterprises

     Organization

Civil Society Organization

     Family

    Organization

    Fig 4

    Dimensions of an Organization

    (Stages of Development)

     10

Report this document

For any questions or suggestions please email
cust-service@docsford.com