Organisational transformation : a Quantum Leap from the traditional to the entrepreneurial

Abstract

Today’s global business environment requires organisation to adapt to increasingly complex technological, economic, political and cultural changes. Environmental turbulences are characterized by perceived dynamism, hostility and complexity. Organisations respond to this turbulence in many different ways. The popular ones involve outsourcing, leasing and renting, shorter product life cycles, downsizing and cost-cutting. Others enter into joint ventures, alliances, mergers and acquisitions. Popular responses often result in more problems than profits; and an average the success rate of alliances and mergers is a meagre 53%. To go beyond improving an organisation’s performance incrementally or entering into contractual alliances, activities need to be directed at the basic character of an organisation. Such changes are referred to as organisational transformations and imply fundamental changes to the way people perceive think and behave at work. Transformational change involves changing the different features of an organisation such as processes, structure, information systems, human resource practices and culture in a co-ordinated way. It is a transition from a control-based to a commitment-based organisation. The outcome is often the emergence of new organisational forms. These forms are mostly distinguishable by an emphasis on bottom-up entrepreneurship and a reliance on a co-operative network to allow for competencies to be shared. The aim of this research is to conceptualise a transformational process and model for changing a traditional, functional organisation to a high performance, entrepreneurial unit in a corporate environment. To achieve the aim a qualitative research study was conducted, which consisted of a survey of relevant literature and a case study. The literature review was performed to understand changes in today’s business environment, the characteristics of an entrepreneurial organisation and the dynamics of organisational change. The case study portrays the organisational transformation which occurred at Schumann-Sasol (Pty) Ltd over the period 1997 to 2003. The case study is a holistic picture of the transformation within it’s specific context and was guided by four research questions: <ul> <li>Why was a transformation necessary?</li> <li>How was the transformation managed?</li> <li>What role did the project team and the consultant play in championing the transformation?</li> <li>What role did leadership play in championing the transformation?</li> </ul> The transformational model which emerged from the research is composed of nine explicit phases, spread over two distinct periods of the transformation: the period when the consultant-project team alliance championed the change, and the period when the new MD as entrepreneurial leader, championed the change. The research generated sufficient evidence to conclude that Schümann-Sasol, redefined itself as an entrepreneurial unit in the Sasol Corporate environment. Distiguishing characteristics were it’s strategy, structure, new products and markets, management processes, systems, human resources practices, culture and leadership. During the period of the transformation performance in EBIT terms increased from the R3.09m to R187.70m. Several key success factors characterized the transformational process: the transformation was strategy-driven; it was mainly a people process; the right measure of entrepreneurial leadership was involved; organisational learning formed an integral part; values were successfully entrenched, ownership and risk were shared and high energy levels were sustained. Many of these learnings could find application in other transformations. Some of these are of particular importance to the South African context, and the way organisational change is being managed. In the broader context the study proves that transformational change can unlock the potential synergies hidden in a merger, even where different national cultures are involved. The research is particularly valuable because of the meticulous way in which the process of transformational change was mapped, variables were identified and dynamics observed and interpreted. It also highlights the strategic role of the Human Resources function and the practices of Organisational psychology in a transformation. Though these practices people’s perceptions, thinking and behaviour can change fundamentally to become a key factor in the attainment of a quantum leap in performance