Managing Organization Change
An organization’s existence and operation are always influenced and shaped by different environmental drivers that surround it. These drivers may have their genesis within and outside that particular organization. The sensitivity or insensitivity to these environmental dynamics may contribute to the survival or the fall of an organization respectively (Dixon & Day 2010, p. 275). The institutional environment is always changing with time and knowledge advancement. What may have worked and led to success in a given organization at one point may become outdated and obsolete. Failure of an organization to evolve in relation to these changes may result in institution-institutional environment disconnect and ultimately collapsing. Yuko’s oil company one of the most successful oil companies in Russia back in 2003 failed to evolve with the fast changing business environment at the time of its zenith in business performance (Dixon & Day 2010, p. 275). It greatly contributed to its collapse.
The ability of an organization to embrace and adapt to change continually is a very important element of business continuity. Such adaptation is further more important if it is pegged on the long-term advantage for the institution rather than on a thrill for a short-lived gain. The architects of change in an organization should always be on the lookout, taking a vantage point over their business surroundings. They should be able to observe and identify changes the in the environment in which their business is set up in and deliberately act accordingly. Dixon and Day (2010, p. 280) notes that in the speedy trailblazing rise of Yukos as one of the most enviable oil companies in Russia was the hand of the chief executive officer, Mikhail Khodorkovsky. Khodorkovsky business prowess contributed to his quick thinking of incorporating experienced foreign workers, especially from western countries as part of his human resource in the company (Dixon & Day 2010, p. 280). Dixon and Day (2010, p. 280) points out that this helped the organization gain regarding useful knowledge transfer which made it quite competitive. However, Khodorkovsky style of leadership was influenced by his Soviet Union background. He appeared to demand absolute power of making key decisions around himself (Dixon & Day 2010, p. 280). Consequently, this set the organization at a disadvantage since there was no proper chain of command resulting in increased cases of corruption and oil theft by those who were very close to him and thus most trusted by him (Dixon & Day 2010, p. 280). Dixon and Day (2010, p. 283) argue that the leadership style hindered the organization ability to harness the skills and knowledge of other intellectuals and professionals in the organization in carving organizational growth strategies. Consequently, the organization’s stability solely depended on the decisions and discretions of one man. In his absence, the organization was not able to hold since all power of decision making laid with him and his close allies (Dixon & Day 2010, p. 280). The leadership gap he left behind at Yukos upon his arrest and conviction weakened the organizational abilities to respond to the crisis and; consequently, quickened its collapse from its prestigious position. Khodorkovsky leadership style failed to mentor potential successors. Yukos as an organization greatly suffered from the lack of a seamless succession transition.
The theoretical background of combined resource-based view (RBV) and institutional theories in explaining the success and failure of organizations helps to reveal if there is a gap existing between how the organizations respond to the external environmental dynamics surrounding them and their internal structuring (Dixon & Day 2010, p. 276). The revelations may provide insight into why some organizations existence will be preserved while others face a downfall. The resource-based view theory limits its scope to the internal outlook of an organization. It views the success or failure of an organization based on its internal resource status such as human resource capabilities and competence (Dixon & Day 2010, p. 276). The scope of this theory experiences setbacks when one is considering the perspective of external environments such as industry drivers or political stability of the external environment. The political environment encompassing a business greatly shapes the outcomes of a business especially if that environment is volatile and quite unstable. If this is not taken into perspective by an organization’s change agents, then such an organization is predisposed to failure. The institutional theory plays a key role in an organization’s ability to scan its external business environment though it does not concentrate on its internal capabilities (Dixon & Day 2010, p. 277). The combination of the resource-based view and institutional theories in analyzing the environmental situations of a business is thus able to capture both internal transformation capabilities and the external influences able to make or break an organization’s survival or failure (Dixon & Day 2010, p. 276-278).
Emerging markets compared to established markets experience very volatile environments. These environments are never stable and are ever constantly evolving as the markets players try to pursue and reach their manifest destiny. The great conflict of interests associated with players within emerging markets presents a time of policy struggle that in some cases is also fueled by corruption and greed (Dixon & Day 2010, p. 278).). These economic and political tensions are not as pronounced in established markets as they are in emerging markets. The influences of politics on the business environment in emerging markets are quite great. Depending on the interest of the political and social class, the effects could either lead to organizational and industry growth or could be very negative leading to industry downfall and the collapse of organizations. The rise of oligarchs within industries fueled by personal interests, greed and corruption may negatively affect industries and consequently result in the downfall of organizations. Interests propelled by the oligarchs and cartels may include social evils and negative practices such as sabotage, money laundering, tax evasion, product hoarding and inflated commodity pricing. These hurt the business environment and may subsequently lead to the downfall of players and organizations that may not have enough muscles to cope.
Yukos had all it takes as an organization to not only survive but survive big in an emerging market and even become one of the top four oil companies in the world in terms of assets base (Dixon & Day 2010, p. 285). Khodorkovsky had made great gains in transforming Yukos into a world class organization attracting interests both from potential international employees and investors’’, winning their confidence (Dixon & Day 2010, p. 283). However, the centralizing of decision-making power on himself resulted in an organization that lacked the subtlety to respond to a crisis in the absence of architectural change leader. If only Khodorkovsky were able to mentor those around him to have the same potential as he did, allowed them to contribute to the intellectual, organizational thought process the gap of his absence could have been avoided. Khodorkovsky also needed to understand that the political environment was very unforgiving especially once you have become the face of competition to the political peers. His intention to challenge Putin for the presidency was one of his greatest undoing (Dixon & Day 2010, p. 287). It was a recipe for political witch-hunt which contributed to his downfall and consequently the collapse of the organization which he worked very hard to build. He did not have the political backing he may have needed to stay afloat since in the first place he had presented himself as a perceived opponent and thus an enemy of the ruling elite (Dixon & Day 2010, p. 288). The strategies Yukos's leadership employed were not in tandem with the situations its external environments were presenting. This disconnect created a gap between Yuko’s intended growth plan and the reality of the sociopolitical environment which was driving a reversion to state control of the oil industry in Russia (Dixon & Day 2010, p. 287). Yukos's leadership needed to be sensitive to all these dynamics in their organization’s environment and carve strategies that would help them weather the storm.
Bibliography
Dixon, S. & Day, M., 2010. The Rise and Fall of Yukos: A Case Study of Success and Failure in an Unstable Institutional Environment. Journal of Change Management, September, 10(3), p. 275–292.
