Hurdle the Cross-Functional Barriers to Strategic Change
As firms attempt to speed decision making, improve their business processes, and become more market-oriented, they have a number of managerial prescriptions to choose from. Most share a common theme: remove the barriers that divide functional units and business units. To this end, many organizations are adopting leaner structures and emphasizing team-based processes to harness their collective strength. However, the introduction of strategic or technological change often signals that traditional barriers remain, barriers that require delicate management to surmount.
We have traced a highly contested strategic decision — the Techno project — in a Fortune 500 communications company. The Techno case exemplifies the change that is transforming the U.S. service sector, most notably in telecommunications, insurance, banking, and financial services, where productivity-enhancing technological gains are generating sharp reductions in employment and a blizzard of new offerings.1 The project centered on the development of a core technology that promised to alter radically the way the firm operated. For some, the technology represented improved productivity, a stream of new products, and a stronger competitive position. For others, it threatened their budgets, existing strategies, and even job security.
The Techno case gave us an opportunity to examine the germination and development of a strategic decision through the eyes of managers in different functions and at different levels. We conducted in-depth interviews three times during the decision process. As the Techno project unfolded, three barriers to strategic change emerged. Here we explore each and highlight the implications Techno has for managing strategic change.
First, we briefly review the strategic decision-making literature, focusing on the forces that often produce markedly different views of the appropriate strategic course across units. Next, we describe the Techno project, explore the turf battles, and contrast the key functional units’ divergent opinions. We also profile the cross-functional communication patterns that united or isolated participants in the process and explore top managers’ roles. Finally, we discuss the implications for managing strategic change.
Cross-Functional Barriers
Strategic change can be best understood as a political process.2 How you feel about a decision depends on “where you sit” in an organization. Rather than emphasizing neat, orderly administrative procedures, emerging concepts “depict strategic decisions as messy, disorderly, and disjointed processes around which competing factions contend.”3 Innovation and change processes may be seen as outcomes of the competition between organizational stakeholders, who each interpret a strategy’s meaning from a different perspective.
References (45)
1. J.E. Rigdon, “Technological Gains Are Cutting Costs, and Jobs, in Services,” Wall Street Journal, 24 February 1994, pp. A1, A6.
2. For a review, see K.M. Eisenhardt and M.J. Zbaracki, “Strategic Decision Making,” Strategic Management Journal 13 (1992): 17–37; and
