The Concept of Organizational Change - Article Example

Name: Roll No: Class: Teacher: Subject: May 18, 2008 University: Contents Contents 2 Introduction 3 Aims and Objectives 3 Background of Boeing 4 The Rational for Choice of Boeing 5 Research Methodology 6 Research Procedures Used 7 Data Analysis 8 Boeing in Change Management Perspective: 8 Organizational Change 11 Discussions and Analysis 12 Dispute Handling with Change Management 12 Managing Change with Core Competences 13 Conclusion 14 Boeing’s Change Strategies in Nutshell 14 References 15 Introduction In this paper, we have attempted to describe the concept of organizational change and the related themes such as organization, strategy and competition. Some relevant models have also been discussed in the paper to support the major concept. Five forces model by Porter, Theory X and Theory Y have been linked with a view to create better understanding. Case study of Boeing Company is presented in the paper. Boeing is the leading aerospace company and the largest manufacturer of military and commercial jetliners. The company has been chosen due to its huge impact on U.S balance of trade and provider of employment to large number of people. The study outlines the competition faced by Boeing and the quest to remain global leader in aerospace industry. For this purpose, a change in culture is necessary and people in the company should accept the change being occurred due to organizational change. Aims and Objectives There are certain aims and objectives of the study as highlighted below: Develop the background by providing significant amount of information about the company selected which is ‘Boeing’. To present and investigate the theme of organizational change and the related concepts. To analyze the major Change program undergone recently in Boeing. To study the change in the company culture and strategies adopted to prepare people and organization in coping with change. Background of Boeing Boeing is the leading aerospace company and the largest manufacturer of military aircraft and commercial jetliners. The company continues to expand its services and product line to meet innovative and emerging needs of customers. The broader spectrum of capabilities comprise creating new and efficient members of the commercial airplane group; incorporating military platforms, warfighter and defense system through particular network-centric operations; establishing advanced and modern technology solutions; and arranging up-to-date customer-financing solutions. The major operations of Boeing are in Puget Sound area of Washington, St. Louis and southern California. (www.boeing.com/) The operations of company are organized into two units. Boeing Commercial Airplanes and Boeing Integrated Defense Systems. To support above-mentioned two unites there is a Boeing Capital Corporation which in fact is a worldwide provider of financial solutions and also the Shared Services Group a provider of broad spectrum of services for the company. Lastly there is a Boeing Engineering, operations and technology whose function is to support in developing, applying, protecting and acquiring innovative processes and technologies. For more than four decades, Boeing has been the major manufacturer and producer of commercial jetliners. The main commercial products of Boeing are 737, 747, 767 and 777. (www.boeing.com/) The company has almost twelve thousand commercial jetliners directly in service worldwide which about seventy five percent of the world fleet. Boeing is also the second largest defense company of the world and the integrated Defense Systems of Boeing provide continuous services specifically for large-scale systems that sophistically combine communication networks with land-sea-space-and air-based platforms for worldwide government, commercial and military customers. The company offers an exclusive and extraordinary range of space and defense system services and products. (www.boeing.com/) The Rational for Choice of Boeing For decades the commercial aircraft industry has been a success story for America. Until the decade of 1980, manufacturers in United States held almost virtual monopoly. Despite the growth of European based Airbus Industry, this in fact persisted through to the second half of 1990s when two firms of United States, McDonnell Douglas and Boeing accounted for almost two-thirds of the global market share. In 1996 most of the analysts were of the view that dominance of United States in this industry would be increasingly be strengthened when a decision was announced by Boeing to acquire the operations of McDonnell for an amount of $13.3 billion. It ultimately established an aerospace behemoth almost twice the nearest competitor’s size. (active.boeing.com/commercial/orders/index.cfm) The industry is among the biggest net contributor to the United States balance of trade and also the largest US exporter. In the decade of 1990s the commercial aircraft industry of United States routinely ran a considerable positive trade balance with the entire world of almost twelve to fifteen billion dollars per year. The overall impact of the industry on employment factor in United States was enormous. In the year 1998, more than one hundred and twenty thousand people, alone in Seattle area, were directly employed by Boeing. Further six hundred thousand jobs nationwide were indirectly supported in related industries and through the significant impact of Boeing wages on the normal level of economic activity. Presently Boeing employs about one hundred and sixty thousand people across US and in seventy countries. In 2007 the total revenues of the company were $66.4 billion. (active.boeing.com/commercial/orders/index.cfm) Research Methodology The purpose of this section is to establish a particular direction to perform research, and attempts to present an exclusive theoretical framework and also the methodology as autonomous in the process of research. The development of framework is intended to follow normally the research process narrated by some specialized researchers as they observed that the present theory could provide to predict specific data could have significance in order to do further investigation. The model-building process can be helpful in this regard as it is similar to the system approach while dealing with the problem. It can be stated that this process entails designing a series of hypothesis, being abstract proposition and is able to be tested by relating particular questions to these assumptions. An inductive methodology best suits such model building process. (Anderson, E.W. 1998) Research Procedures Used Concentrating on the internal functioning of aerospace industry for the purpose to construct an applied model inflicts a methodology that permits for high degree of interaction with the related persons and organizations involved in it. Study of business paradigms in the industry is to understand the new conceptual structure for highlighting the investigations made in this study. This is also helpful in leading us towards the altered perceptions of important elements of Boeing Company and opportunities present from adopting the theme of organizational change. Business research in this paper has followed the above-mentioned scientific trend. As the stakeholders of aerospace industry and the Boeing Company have in a mix of competitive and collaborative way of doing business, new concerns and issues relating the significance of development of system have arise. This alteration in approach has also engaged evaluating what economic system show about this particular nature of business. Data Analysis In this paper the data collected through primary and secondary sources which were assessed to perform analysis. In the analysis phase the uniqueness of sources was scrutinized. The set of data was also investigated for the sternness of missing data and existence of missing data models as this suggest the procedure of handling such data. (Hair et al. 1998) The stage of analysis scrutinized the constructs for reliability, content validity, convergent validity and social desirability prejudice. The procedure of confirmatory element analysis is termed as a useful approach for the purpose of constructing validity. This procedure provides an exact view of dependency and is also a formal examination of uni-dimensionality of magnitude. (Steenkamp, 1991) Support for this process as a more thorough test of dependability stemmed from the usage of loading certain parameters and detecting variances for determining the consistency of the individual articles as well as the dependability of compound measure that is formed by such articles that are also called as composite reliability. Boeing in Change Management Perspective: ‘To affirm that the airplane is going to revolutionize the future is to be guilty of the wildest exaggeration.’ -- Scientific American, 1910 A long list of human interventions is historically evident of progress mankind made during last one century. Humans visit to moon, search for mars, flying on jets and escorting to space; all are important mile stones of history that no historian can deny. During 20th century in modern rat race of business exploration and territory conquering, Six companies Boeing, Airplane Co., McDonnell Aircraft Corp., North American Aviation, Douglas Aircraft Co., and Hughes Aircraft incorporated in the world of business. (Camille Geiger, 2006, p367) Since it origin Boeing has passed many phases of change management. William Edward Boeing the pioneer of Boeing was born in 1881 in Detroit, Mich. He started making of floatplanes near Seattle then that was a new concept in the town at that time and many analysists criticized the change Edward made for producing aircrafts at a new location. Within few years of the idea’s onset all myths about its failing and losing market share died automatically and Edward’s change management was proved as the thought of a genius. Since its beginning, Boeing remained the focus of critics’ eyes as it started seemingly impossible venture though it proved pages of history every possible success and made golden milestones for the follower airspace companies. Boeing was not a huge empire from the day one and it took brick by brick to build multi-trillion empire of today’s business. On the emergence of this century all five pillar companies of airspace industry joined and formulated a bigger Boeing than forever. .(J. Lynn Lunsford, Sep 17, 2007, pA8) Without positive and thoughtful change management Boeing could not be the leading aerospace company that is known as the largest manufacturer of commercial airplanes, army planes, jet fighters, mail planes, and cargo planes. Brought in changed philosophy made the Boeing today’s famous manufacturing company of rotorcrafts, missiles, defense systems, launch vehicles, satellites, and other defense products. Boeing has not applied the real sense of change management in its own business but it is bringing the environment and application of change in other companies too. Presently Boeing provides various services to NASA for space shuttle and related space station. NASA is not the only organization that gets expertise from Boeing, USA military also gets active support from Boeing. Dealing in more than 90 countries, Boeing has its in own virtual hold on the geographical markets where no alternate airspace industry can stand against it.(J. Lynn Lunsford, Sep 17, 2007, p 456) Being the pioneer of many new concepts and owner of bench marked innovation, Boeing has its own share of global value added business. It actively works in generating new members of business family by integrating military bases, innovating solutions for army personnel and modifying their old technology to the new standards. (Sutter, Joe 2006- p 24) At its headquarter in Chicago, Boeing has 150,000 employees and company has a revenue of $61.5 billion. Boeing has two business units i.e., Boeing Commercial Airplanes and Boeing Integrated Defense Systems. These two units are supported by Boeing capital an international financial service provider company. Being the second largest defense company in the world, Boeing integrates various features of larger defense, and provides end to end large scale services to the larger communication net works. (Camille Geiger, 2006) Company started offering extraordinary integrated defense systems to its national and international buyers during 60s that brought the volume of business very high in few years. USA government has maximum advantage of this function and tries to get rational usage of Boeing wherever needed.( Sutter, Joe, 2006, p767) that is in fact the result of positive changes Boeing management brought in shape of cost effective management after labor crises in 1980 and then few times in the years to come. To cope with odds of business and meet futuristic industry needs Boeing started developing an innovative portfolio from 70s; now Other than these air craft manufacturing units Boeing also owns Boeing Capital Corporation, Shared Services Group, and Engineering, Operations & Technology. These setups further enhance the image of company and prove the worth of financial as well as human capital of the organization. Organizational Change Organizational change in real sense is the radical re-viewing and re-thinking of an organization overseeing its functions. It is not just an acknowledgement and reorganization of a company, it is in fact a shift in the manner people view how the things are done. Efforts for organizational change start by establishing the business drivers that specifically necessitate the essential need for change. As such a change initiative supervises and looks across entire organization to discover how it can successfully improve its operations. To implement change in the operations of organizations, there should be changing, unfreezing and subsequently refreezing of entire business practices. The step of refreezing makes a change everlasting and is established through reinforcement, repetition and reward. The lasting change can only be inducted when positive reinforcement and performance-contingent rewards are present. (Collins,J 1998) Consistent and constant communication is also essential to the ultimate success of organizational change. It is believed by most of the theorists that people do not fear the element of change but they fear the uncertainty, unpredictability and the unknown which is linked with change. The staff of an organization could fear the loss of security, comfort, status, job or authority. As such communications planning describes as to how the management communicates with its staff prior to, in the process and after organizational change to avoid as well as reduce this uncertainty. (Senge, P. M. 2000) Discussions and Analysis Organizational change is an enormous challenge. Boeing has swiftly gained the reputation of early adopter beneficent by implementing change management in its structure. In early 70s when profitability started declining and business suffered lot in few months, company made drastic changes to curb bad management practices and applied innovative management by hiring highly motivated individuals who brought an overall motivation among company employees in few months and profits started taking off once again. During the crises times, that occur often in the history of company, organizational change in Boeing is achieved through advancements in productivity, excellence in overall corporate performance and productivity growth. Company always showed trust on its employees and kept struggling for the better work environment. Improved pension schemes, medical faculties, rapid growth and corporate family culture are few good examples Boeing carried through decades. The theme of organizational change in Boeing has led the blend of system dynamics, learning networks, organizational effectiveness processes and lean manufacturing. Moreover it has facilitated the teams to expand the skills and understanding in other sub-methodologies. (Zimmerman, J. 2002) Dispute Handling with Change Management We have discussed Porter’s Five Forces Model in the chapter of literature review. Among the five forces, the first competitive force is the threat of new entrants. Boeing held a monopoly until 1980s but the rise of European based ‘Airbus’ challenged its growth. Despite the formidable reach of Boeing, ever since the decade of 1980s, the US dominance is challenged and confronted by the Airbus industire, which is the consortium of four European manufacturers of aircrafts. (www.boeing.com/) Since 1981, Airbus has emerged as the second largest manufacturer of aircraft. In the start of 1990s, share of aircraft orders of Airbus stood between twenty to thirty percent of the entire global demand and subsequently in 1994, Airbus earned more orders than Boeing. Although two sides reached an agreement to put aside their dispute, the dispute erupted again in 1997 when the merger of McDonnell Douglas with Boeing was challenged. The analysis of this dispute suggests that one of the five forces in Porter’s model is working and impacting the operations of Boeing. (Webber, A. 2002) Despite this dispute, Boeing has proved itself as the global leaders in knowledge management and changeal management. In the context of the dispute with Airbus and the incidence of 9/11 which has increased the strains and pressures in the aerospace sector, Boeing has redefined itself in the face of challenges for the sake of continuity and maintaining the position of global leader. (Robert, M. 2003) Managing Change with Core Competences Boeing has a strong eye on the development of its competence and product leadership. (Stewart Wilson, 1999, p 551), To achieve and maintain competence Boeing has religious belief in changing for better and exercises the following in all possible departments: Large-scale systems integration: Boeing is not the producers of mega airplanes only it has this mega system integration everywhere. Where you go, you will find Boeing is focused on big things if it is IT department, research laboratories, retiring rooms, cafes, assembly halls or PR campaigns. Mega structure is visible everywhere. Boeing combines all mega structures together in an ideal integration and achieves business results. Visibly seen integrations are among production, IT, marketing research, customer services, customer care department, customer feedback follow-ups, financial, electronic and business development. Lean enterprise: Boeing focuses on lean production principles and does not believe in wasting time and resources on unplanned or poorly planned projects or experiments. Team of experts reviews every single proposal for viability and then issues go ahead sign to the concerned department. In this way Boeing saves various small and major expenses. Principally all managers are convinced on efficient use of resources, high inventory turns, short time cycles, and high quality with low cost.( Peter M Bowers, 1989, p111) Conclusion Boeing’s Change Strategies in Nutshell Boeing’s history is evident that it always planned and implemented change management great value which became a ritual in various corporations presently. Some of the prominent factors responsible for the change and success of company are: Innovation & core businesses: Boeing always focused on core business activities. It focused on innovation but in this race of innovation, it did not go uncontrolled for unnamed and unwanted diversification many small corporations fall in. It remained focus on its industry and kept working on airspace products and related innovations. Advantage strengths into new products and services: Instead of taking support of so called diversification Boeing took its products and services to new heights of excellence and brought good business with repute in long term success. Boeing used its products as main advantage to strengthen its airspace fortune on solid grounds. From mail-delivery planes to fighter planes and mega airbuses and then its satellite business development are some of solid proofs of Boeing’s successful heritage. Open new frontiers: Boeing’s doors remained open for innovation and new product developments. Boeing realized since its commencement that its business is highly sensitive and highly prone to risks and failures. According to William Boeing, it gave them courage and support and motivated them as they believed of doing something original and highly innovative that others are not doing. References Anderson, E.W. 1998 Structural Equation Modeling in Practice: A review and Recommended Two-Step Approach. 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