Organizational Change (3)

‫جامعة اليرموك‬ ‫ك ية ااقتصاد والع و اإدراية‬ ‫قس اادارة العامة‬ ‫‪Organizational Change‬‬ ‫‪and Development‬‬ ‫إعداد الطاب‪:‬‬ ‫محمد معتصم المقداد ( ‪)2014161023‬‬ ‫محمد ابوعلي ( ‪)2015370021‬‬ ‫رعد الطبري ( ‪)2015370018‬‬ ‫مقد استكمااً لمتط بات مادة تصمي المنظمات‬ ‫الفصل الثاني ‪2017‬‬ Organizational Change and Development Introduction Based on a five year survey conducted by the world-renowned McKinsey consulting firm (Isern, & Pung, 2007), out of the 1536 companies that underwent organizational change, only 38% of the company managers claimed that the process succeeded in increasing work performance. Regarding long term health goals (such as increasing ability, better customer relations, supplier relations, positive work culture), only 30% of the managers associated these with organization change. Hence, the goals of organizational change are rather multifaceted. The most common goal stated by over 50% of the interviewees is “minimizing costs”. Other goals include bettering the firm, mergence, crisis intervention, or overcoming competition. Seemingly, successful organizational change is not merely a process of adjustment, but also requires sufficient managing capabilities. Change is an essential skill all organizations must master in order to maintain a competitive and sustainable position in their market (Burke, Spencer, Clark, & Coruzzi, 1991, p. 88). One way to classify change can be taken from a model by Nadler and Tushman (1995). In this model, change can be ordered according to two dimensions. In one dimension the extent of a change ranges from incremental, which is small but continuous change events, to transformational, which is major change that will have a large impact on the organization. In the other dimension, change can be classified as either proactive, which is planned and in advance of market forces, to reactive, in which change is enacted in response to market forces. The following discussion attempts to understand the causes of organizational change and its elements, approaches, process, resistance and management, and finally the possible factors leading to its breakdown. Research Objective The overall objective of this study is to contribute to the understanding of how to develop, implement and sustain an essential change in organizations. Research question Situated in a fast changing modern environment and facing relentless international competition, organization has so far thrived. However, organization now faces a decision point. Given that continuous growth will yield increased pain, should organization choose to settle into their market and perhaps stagnate or should it reinvent itself and continue its youthful, but painful, path towards market growth? -2- Why does an organization need organizational change? What is organizational change? It is a process in which an organization optimizes performance as it works toward becoming its ideal state. Why does an organization need organizational change (Jones, 2004)? From a passive perspective, organizational change occurs as a reaction to an ever-changing environment or as a response to a current crisis situation. On the other hand, a more proactive viewpoint is that it is triggered by a progressive manager. Furthermore, organizational change is especially evident when the organization has just undergone a transfer of executive power (Haveman, Russo & Meyer, 2001). Van de Ven and Poole (1995) proposed that the causes of organization change can be explained by one of the following theories: teleological theory, life-cycle theory, and dialectical theory. The teleological perspective believes that organizational change is an attempt to achieve an ideal state through a continuous process of goal-setting, execution, evaluation, and restructuring. Life-cycle theory claims that the organization is an entity that depending on the external environment, cycles through stages of birth, growth, maturation, and declination. Dialectical theory hypothesizes that the organization is like a multi-cultural society with opposing values. When one particular force dominates over others, a new organizational value and goal is established, resulting in organizational change. The targets of organizational change The influential factors of organizational effectiveness are widespread, including factors that are related to external environmental changes, and factors which will improve the internal managerial effectiveness. The organization must consider the reasons for change, the external environment, and the internal situation to decide which factors to change. The most common known targets of organizational change include vision, strategy, culture, structure, system, production technology, and leadership style (Yang, Zhuo, & Yu, 2009). Vision includes a firm‟s organizational core value but one that also adapts accordingly to the external environment. When an organization undergoes change, its core value needs to be determined so that in the process of transformation, it can be preserved. Strategy refers to the organization‟s long term goals and the steps and resources needed to be considered in its decision-making. The strategy change can be divided into the enterprise strategy change (Ex: low cost strategy), the overall strategy change (Ex: multiple-angle management), and the global expansion strategy change. Culture is referring to its members‟ collective value, norm, and basic assumptions. The change involved is altering the content of this collective value and/or basic assumption. Typically, the explicit culture is more easily manageable or changed than the implicit culture. Structure is an official system of the duty and the authority relations of an organization. Structural change is transforming the organization‟s vertical disintegration or horizontal differentiation, power allocation, and level of formalization. -3- System is the formal regulations, policies and procedures such as reward system, performance evaluation methods, goals budget system, etc. that are used to operate the organization. Production science and technology is the technology, the knowledge, the ability, the material, the machine, the computer, the tool and other equipments which transforms inputs to outputs. Leadership is the influential force within the organization. Leadership style impacts the group dynamic and also the interaction of its members. The above targets of organizational change will influence each other. For example, the actualization of vision depends on the incorporation of suitable strategy and the organization‟s culture. Therefore, in the process of organization change, the “systematic viewpoint” has to be taken, so that different change targets can be considered as a whole to achieve the organizational change successfully. The different types of organizational change Managers continually face choices about how best to respond to the forces for change. There are several types of change that managers can adopt to help their organizations achieve desired future status. In general, the types of change fall into two broad categories: evolutionary change and revolutionary change. Evolutionary change is gradual, intermittent, and narrowly-focused (George, & Jones, 2007; Miller, 1980/1982). Its main purpose is to make continuous improvement in order to adjust to the environment changes (Weick, & Quinn, 1999). Revolutionary change is rapid, dramatic, and broadly focused. It often happens when the current operation method can no longer fulfill the demand of the external environment, and a significant change has to be made in a short period of time to keep the organization work. The most widely known types of evolutionary change is socio-technical systems theory, total quality management, and management by objectives (George, & Jones, 2002; Yang, Zhou, & Yu, 2009). Socio-technical systems theory emphasizes the importance of the social and technological aspects within the organization during the process of change. In other words, it emphasizes the development of the most optimal partnership between members/workers of the organization and the technology. Total quality management is an ongoing and constant effort by all of an organization‟s functions to find new ways to improve the quality of the organization‟s good and services (Deming, 1989). Management by objectives specifies the importance of regular meetings between management and its subordinates. The objective is to assess future work goals, evaluate work performance, and discuss challenges and obstacles in an attempt to motivate work efficacy and coherence (Cummings, & Worley, 2001). There are also three important types of revolutionary change: reengineering, restructuring, and innovation (George, & Jones, 2002). Reengineering involves the fundamental rethinking and radical redesign of business processes to achieve dramatic improvement in critical, contemporary measures of performance such as cost, quality, service, and speed (Hammer & Champy, 1993). When -4- organization experiences a rapid deterioration in performance, manager may try to turn things around by restructuring. For example, an organization tries to simplify its organizational structure by eliminating divisions, departments, or levels in the hierarchy; and downsizing employees to lower operating costs. Innovation is the successful use of skills and resources to create new technologies or new goods and service so that an organization can change and better response to the needs of customers (Jones, 1988). The processes of organizational change Regardless of what type of evolutionary or revolutionary change an organization adopts, managers face the problem of getting the organization to change. Many scholars have devoted to the study of organizational change process, and most of them follow Lewin‟s “Force Theory of change”. Based on the observation of real world organizational change, Lewin proposed a three-step process for successful organizational change: unfreezing, moving, freezing (as cited in George & Jones, 2002). Unfreezing starts from the members‟ understanding of the organizational crisis or vision that motivates them to change, normally, unfreezing will go through three stages. First of all, there must be enough information indicating that the current organizational condition is not ideal. Secondly, this information has to be related to the important goal of the organization, thus elicits members‟ anxious feeling. Finally, a solution has to be proposed that will reduce the members‟ insecure feeling and resistance to change (Schein, 1992). Moving is taking certain actions to transform the organization to an expected condition. The moving process is quite complicated; it involves goal setting, support seeking, resource finding, planning and execution. There are two forms of moving: problem-solving orientation, and vision orientation. The organization may adapt either one according to their specific situation. Freezing is to stabilize the change achieved in moving stage. The individual, the department, and the organization, all have an inertial way of thinking and doing, so that the change achieved in moving state will return to the status quo ante if freezing is not done. Form new rules, regulate members‟ new behavior directly, reinforce appropriate responses, are all possible ways to internalize the new value or behavior into the organizational culture. Forces in organizational change According to Lewin‟s force-field analysis model, an organization is an open system. There are two forces in organization change (Lewin, 1951), one is the pushing of the organization to a new direction; it is the driving force. The other is preventing organization from changing; it is the restraining force. When driving force is stronger than the restraining force, organizational change occurs, and the organization will move towards a new direction. When restraining is stronger than the driving force, organization will stay where it was; and when these two forces are equally powerful, it will stay stable temporally. -5- When organization is about to change, there are different forces to prevent them from change, which is the above-mentioned restraining forces. Restraining forces can be divided into three levels: organization level, secondary unit level, and individual level (Yang, Zhuo, & Yu, 2009). Factors in the organizational level include the organizational structure inertia and system pressure, organizational culture, and the pressure from past success. Factors in secondary unit level include the standpoint difference and interest conflict between different departments. Factors in individual level include the misunderstanding, lack of trust, own benefit threat feeling, uncertainty, custom, etc. How to manage these factors that may hinder the successful change of the organization. The active ways to gain organization members' support includes education, communication, participation and involvement. The passive ways to eliminate members' resistance include assistance, negotiation control, and coercion (Kotter, & Schlesinger, 1979). These methods are most effective in different situations therefore the superintendent must manage the organization change according to the situation, and use the combination of suitable methods to implement the change. Kotter‟s 8 Step Change Model can be used as a good framework (Kotter, 1994): 1. Step One: Create Urgency 2. Step Two: Form a Powerful Coalition 3. Step Three: Create a Vision for Change 4. Step Four: Communicate the Vision 5. Step Five: Remove Obstacles 6. Step Six: Create Short-term Wins 7. Step Seven: Build on the Change 8. Step Eight: Anchor the Changes in Corporate Culture Why does organizational change fail? According to Mckinsey investigation (Isern & Pung, 2007), only 38% interviewees think their company‟s organization change has successfully increased their work performance, and only 30% believe their organization change has achieved the organization‟s goal of long-term health. It is mainly because there are many factors that will affect the success or failure of organizational change. The 6 most important factors include the insufficient readiness for change, lack of systematic plan for organization change, fast solution expectation, the focus of change activity instead of result, poor management in change process, and mismatch between change plan and organization context (Yang, Zhuo, & Yu, 2009). To achieve successful organizational change, all these factors have to be considered carefully. The following section will explain each of them briefly. Readiness for change refers to the degree of positive acceptance of the necessity of change, and the positive attitude toward the effect of change on self and the organization (Armenakis, Harris, & Mossholder, 1993). The higher the preparation, the higher the acceptance and executive power of the member shall be. The lower the preparation, the higher the resistance to change, and the higher the probability of organization change to fail will be. -6- Another common reason for organizational change to fail is that many organizations do not take the systematic viewpoint to make a holistic plan for organizational change. For example, the attempt to make change through education only, and to overlook other factors that may affect employee‟s behavior such as organizational system, structure, culture, etc. Moreover, some organization applies the identical changes plans to all departments and individuals without considering their differences. The fast solution expectation is another error organization makes. They often assume introducing a set of organizational changes can solve all the problems, and recruiting an outside consultant can assist on everything. With this expectation, the organization will depend on the consultant too much, and invest too little, and will end the change plan too early if the achievement does not meet their expectation. In addition, when planning the organizational change, members often take the change activity too seriously, but neglect the change goal itself. Thus, members participate in the activity vigorously, but the achievement is actually very limited. Poor management in change process is another commonly made mistake. Many factors have to be considered and attended to in the unfreezing, moving or freezing stages. Overlook certain factors many lead to total failure of the organizational change. Finally, the match between change plan and organizational context may also play a significant role in the success or failure of organizational change. Organizational change is to establish new pattern of thinking and behavior. When the new pattern conflicts with the old ones, the oversized resistance tends to cause the plan to fail. Therefore, in designing a change plan, the organizational context must be incorporated. -7- Huawei: An Exemplar for Organizational Change in a Modern Environment Huawei Technologies Inc. (hereafter Huawei), a world leading Information and Communications technology (ICT) solutions provider, has become the world‟s largest telecoms-equipment-maker by surpassing Sweden‟s Ericsson in its annual revenue in 2012 (The Economist, 2012). Huawei‟s development is an extraordinary transformation. Its founder, Mr Ren Zhengfei, a veteran of China‟s Liberation Army, started Huawei as a one-man sales agent selling PBXs (Private Branch Exchange) in 1987. By 1993, Ren had built a Research and Development (R&D) team, and Huawei designed its very own digital PBX. From 1995, Huawei started entering overseas markets. Today, 25 years since Huawei started, this little known electronics manufacturer has reached sales revenue of US$35.35 billion, employing over 150,000 staff around the world, and having a product presence in over 140 countries, serving more than one third of world‟s population (Huawei, 2013). From an unknown one-man sales agent to an international telecommunications equipment giant, this transformation is a quantum leap. One clear observation can be made about this case: Huawei is a Master of Change. Diagnosing Huawei’s Change A fundamental question to ask is “why does Huawei need to change, and what does it need to change?” A “diagnosis” of Huawei needs to be performed to be able to answer it squarely. Organization Change Diagnosis External Environment Political Element Huawei‟s transformation has been subject to political pressures. In February 2011, Huawei was blocked from acquiring the assets of a US networking hardware start-up. In the same year, the US again blocked Huawei from participating in the construction of a nationwide public-safety LTE network. In October 2012, the US congress claimed that Huawei posed security risks to the US, because “their equipment could be used for spying on Americans” (Gorman, 2012). In the same year, the Australian government banned Huawei from bidding to build the national broadband network, and it further overruled a push to relax the ban in 2013 (Financial Review, 2013). These incidents reflect the political and security barriers for Huawei, while some of them are genuine, many were created by the target nation‟s desire to protect their own industries (Greenberg, 2012). However, whatever the intention is, they have a large impact on Huawei‟s reputation and growth. -8- Economic Element The world‟s industrial economies have been charting a downward spiral since the Global Financial Crisis (2007-2008). In particular, Europe and the European Union have met severe economic pressures. Europe is a key international market for Huawei. As a result, the economic downturn continues to affect Huawei‟s key customers – the telecommunication carriers who continued to survive despite tough economic conditions – were, and are going to continuously seek to improve their financial position by postponing their investments in infrastructure and while cutting overall costs. Technological Element Huawei's products are largely in the category of computing hardware, which is characterized by rapidly changing technology and evolving industry standards. As Moore‟s law observes, these computing products become obsolete about every 18 months, and new designs and products are a norm of industry expectation and practice. Huawei must manage its technological risk in this rapid product cycle, and at the same time, create new products and services to respond to the changing technological environment through continuous high levels of technological innovation. The Telecommunications Industry The telecommunications industry is at a growth stage in its new industry life cycle. Its markets are intensely competitive, factors such as price, functionality, service quality, and timing of new products and services can severely affect competitiveness. Huawei‟s competitors include Alcatel-Lucent, Cisco Systems, Datang Telecom Technology, HewlettPackard, Juniper Networks, Ericsson, Nokia Networks Solution, Motorola Solutions, NEC, and ZTE. These competitors work hard to maintain their own share of the total market leading to high competitive pressure. An additional peculiarity of this industry is the rapid technological development and the artificial threshold for premature obsolescence. For example, mobile phones are released with accelerated technological functionality to a market whose consumers have heightened expectations for technical advancement and perfection. This results in hastened product development timeframes and short life cycles with lower returns on investment. Further, the industry‟s consolidation (e.g., the merging of large players and the evolution of the global telephone companies) has largely increased the bargaining power of the telecommunications carriers. These novel factors create ferocious market conditions, what Kim and Mauborgne (2005) call a Red Ocean environment. These factors add pressure to Huawei to deliver their products to the market, especially in terms of their ability to do this sustainably. Merger and Acquisition Pressure In the past decade, mergers and acquisitions have been a feature of the industry. For example, in November 2006, Alcatel and Lucent completed a US$11 billion merger, forming one of the world‟s leading communication solutions providers (CBC, 2006). Nokia, the world‟s largest manufacturer of mobile phones, and Siemens Information and Communications, merged their mobile and fixed-line phone network equipment business in order to create one of the world‟s largest network firms. The resulting firm, Nokia Siemens Network, was created -9- in June 2006 (The Guardian, 2006). This merger has recently been followed by another merger for US$7.2 billion between Nokia and Microsoft (Reuters, 2013). In these cases of mergers and acquisitions, Huawei‟s competitors benefited through increased multinational reach, improved revenue generation and cost savings and enhanced global capacity for research and development. Such mergers and acquisitions pose an ongoing great threat to Huawei‟s market share. Despite these threats to its market share, Huawei has not only maintained its share in the market, but has managed to increase it (Huawei, 2013). This is largely due to its ability to manage organizational change. Inside Huawei Mission & Strategy, Leadership and Organizational Culture Elements Huawei has a sharp vision, a vision to enrich life through communication. It focuses on its customers‟ challenges and needs and strives to create maximum value through excellent service (Huawei, 2013). It has three pillars of businesses, reaching from the telecom carrier network, to the enterprise business, and the consumer business. Its strategy can appear to be technology centered, but two key themes are apparent – customer-centered innovation and win-win cooperation. In terms of its leadership, Mr Ren is said to be a philosophical, reflective, visionary and inspirational leader, who exerts great influence on Huawei‟s culture, morale and organizational development (Lou, Cacchione, Junkunc, & Lu, 2011). Confucianism permeates in Huawei‟s organizational practices, stressing diligence, harmony, and respect. From the perspective of Hofstede‟s (2001) dimensions of national culture, Huawei scores high on collectivism and long-term orientation, which can be seen through its investments in venturing in the European market. In which case, it sacrificed profits in early business dealings in order to gain ground and market share. Huawei also has a “Mat culture”, which is often-mentioned in literature and news articles (Lou et al., 2011; The Economist, 2011). Each of Huawei‟s staff has a mat under their desk, which is for an afterlunch nap or when staff need to rest when working late. Such a practice further reflects Huawei‟s climate of diligence and industriousness. To encourage and enforce its employees‟ dedication, Huawei rewards its employees according to their performance and contribution, and by offering growth platforms and development opportunities (Huawei, 2010). Structure and System Elements The Burke-Litwin Model (1992) includes the elements of structure and systems when defining the internal system. Observations about Huawei‟s governance can be made. First, its governance structure is clearly defined with a supervisory board and board of directors, which is supported by key function committees. Second, it has well-defined Business Groups (BG) with wellshared group central supported functions. Huawei‟s departments widely adopt the shared service model to consolidate global resources (Annual Report 2012). The Economist awarded Huawei the prestigious „Corporate Use of Innovation - 10 - Award‟ in recognition of its remarkable ability to create particularly innovative environments and quickly respond to market trends (The Indian Express Ltd., 2010). Huawei also employs world-class management systems, which are based on ISO9001 (an international standard for quality management systems) and TL9000 (an international standard for quality management systems of the telecom industry); through these systems, Huawei has developed its capabilities to selfassess and improve its services and products on an ongoing base (Huawei, 2013). Huawei also reviews its performance through balanced scorecards, through which organizational performance goals are measured at all groups and levels down to an individual employee. These structure and systems ensures Huawei‟s vision and strategy are well understood across the company, and it aligns its vision and strategy to its organizational and individual objectives. Individual Roles, Motivations and Values Elements Individual motivation, needs/values, and performance are elements included on the third level in the open system of the adapted module; they are identified as the key elements for the incremental changes, as they are related to day-to-day operations. Insight into the motivation and value of its employees can be gained from the quarterly magazine published by Huawei for its employees, called “Huawei People”. The magazine, comprising many stories that are written for and by Huawei‟s individuals, gives the overall impression of high moral, high loyalty, and the individual value that aligns with the value of the company. These individual roles, motivations and values impact on each other, and also feedback to impact the higher levels. Huawei’s Transformation As discussed above, Huawei operates in an environment, which is subject to change (political, economic, etc.). In order to succeed in this environment it has developed a unique culture combining winning aspects from its aspiration, drive, values, and its staff. It has faced, and will continue to face, many changes in order to survive and thrive. A number of critical changes have been observed in Huawei, which have tapped into this culture. From Imitator to Leader Unsurprisingly, Huawei has transformed itself from a technology imitator to technology leader (Liu, 2013). This is not incidental; this is a clear reflection of its re-orientation, adaption, tuning, and recreation strategies. Huawei has about half of its staff working on R&D with over 16 R&D centers and 28 joint innovation centers around the world (Huawei, 2013). Its wide range of products includes not only the traditional network equipment, but also wireless infrastructure, optical networking, datacom, enterprise solutions, and handsets. It was a world leader in designing and employing the world‟s first 3G network, it has led, and is continuing lead, the world in the development of the 4G LTE (Long Term Evolution) network (Telecoms 2012), and it has - 11 - recently delivered the world‟s fastest high performance computer (FNN, 2013). In particular, with its far-sighted vision, while 4G is still new, it has already commenced work on 5G, which is expected to be commercially delivered by 2020 (Forbes, 2013). 5G will give mobile broadband speed up to 10 gigabytes – 100 times faster that 4G mobile. These R&D initiatives have played a critical role in propelling Huawei through this change into a position of global leadership. From China’s Countryside to Developed Countries Huawei‟s initial markets were in China‟s rural countryside. Its well-quoted strategy during this period was to encircle countryside first and then capture cities (Business Today, 2009; The Economist, 2012; IntoChina.Asia, 2012). Through the years, its international forays included Southeast Asia, Russia, Africa, Latin America, and Europe. Over the years, Huawei has tuned and adapted its strategy to “developing countries first, developed countries after” (Frost & Sullivan, 2007). This tuning and adoption allowed Huawei to gain sustainable traction in the international market, and helped it to transform its internal organizational structure and gear the company towards establishing an international presence. In 2004, Huawei‟s overseas sales had surpassed that of the domestic market. It now has most of Europe‟s major telecommunications corporations among its customers. Its Europe, Middle East and Africa region contributed US $12.4 billion to its revenue, nearly one third of its global revenue (ZDNet, 2013). Global Operation Expansion Even with the uncertain political environment, Huawei strategically set out to gain economic and technological advantages in different geographic areas. It has employed “re-creation” to increase its speed of internationalization since 2001 by creating its localized operations globally. The following examples demonstrated Huawei‟s global expansion.    Initially launched a small software development operation in India in 1999, then opened an R&D center in 2001. The Indian R&D center now is the largest and most important asset outside China. Launched FutureWei, a fully owned US subsidiary, in 2002, demonstrating its commitment to international business, and in particular, to the North American market. Huawei‟s European headquarters are strategically located in the UK in order to tap into this dynamic and innovative telecommunications market and raise its profile in the European markets. Building Strategic Alliances Entrepreneurial partnerships have become pillars of an overall international venturing strategy for Huawei (Luo et al., 2011). Huawei applies a “re-creation” strategy to make multiple strategic alliances with universities and companies, including competitors and world leading companies, such as Intel, Texas Instruments, Altera, Motorola, Oracle, and Sun. Some of Huawei‟s joint ventures are listed below: - 12 -     a joint venture with Siemens for developing 3G mobile communication technology products; a joint R&D center with Motorola to develop UMTS technologies; a joint-venture with security firm Symantec to develop security and storage solutions to market to telecommunications carriers; a joint venture with a UK-based marine engineering company, Global Marine Systems, to deliver undersea network equipment and related services. Huawei‟s mergers and acquisitions support its strategy to become impregnated with its partner‟s technology by internalizing it, leading to a more efficient and cost effective method than developing the technology in-house, and at the same time increasing market reach and leveraging brand equity (Luo et al., 2011). Managing the Change Change needs to be managed, otherwise failure may result. How did Huawei manage its change? A Change Agent Huawei is a great change agent. Its entrepreneurial growth strategy is in many ways reflected in the entrepreneurial characteristics of the change agent - Ren Zhengfei (Luo et al., 2011). The change agent‟s critical role cannot be over played enough. Ren is the change catalyst and the agent who initiates, sponsors, leads, and executes changes. For example, he realized the necessity of expanding abroad as early as 1995 and pointed out, “We should not wait to expand abroad until everything is ready. Instead, we will get familiar with the markets and then conquer them in the process of learning from our international competitors…” (Luo et al., 2011). When he realized the importance of having international management operations, he made the decision to spend up to 3% of revenues buying advice from Western companies like IBM (The Economist, 2012). With Ren‟s far-sighted vision and unwavering support and drive, Huawei was undergoing constant organizational change leading it to become an indisputable telecommunications giant. Sense of Urgency Sense of Urgency is the first and most critical step in John Kotter‟s 8-step process of leading change (Kotter, 1996). An “emotional stir up” is critical in order to “break open the shell of complacency and selfrighteousness” in organizations (Lewin, 1951, p. 229). Huawei has this sense of urgency well induced. Ren once said, “We don‟t have the reputation and networks that our international rivals do. Thus we have no choice but to make strenuous efforts. We can make good use of our rivals‟ coffee time” (Luo et al., 2011). He cautioned his employees that that complacency leads to crisis in the highly competitive telecommunications market. “It is spring now, but that means winter is not too far away, so we will have to ponder about the problems in winter during spring and summer… Huawei must prepare itself” (Wagstaff & Yee, 2012). Ren shares his - 13 - deep pools of insight about life, strategy, and the company through speeches and publications with his employees. This strong sense of urgency imbued by Ren permeates in Huawei and stirs Huawei‟s employees to constantly change and transform. Collective Learning Lank and Lank (1995) emphasize that the quality of individual and organizational learning is an important determinant of organizational effectiveness. De Geus (1988) also states that the ability to learn faster than competitors may be the only sustainable competitive advantage. Learning plays a pivotal role in organization development and change. Huawei is a living example of applying organizational learning, which consequently renders it a sustainable competitive advantage. Ren once said, “We have not yet got rid of our guerrilla style, and the new management style for international expansion has not yet established. ... We must learn from our international competitors” (Luo et al., 2011). In order to catch up to the international best management practice, Huawei imported a world-class management system of technology from IBM to establish and refine the technology management. It actively cooperates with leading management and consultancy companies such as IBM, Hay Group, KPMG, and PwC. On the R&D front, after the realization that it needed to develop its own technological capabilities because of the fierce competition amongst manufacturers, Huawei tirelessly learned from its competitors and collaborators in order to catch-up and Lead (Liu, 2013). As Barbieri et al. (2013) commented, Huawei‟s “double face identity” allows it to be a contributor as well as be a learner in alliance with different leading prestigious companies. The ability to learn from its alliance-based network from leading players has been critical and a springboard for Huawei to shorten its learning curve, stimulate R&D investment and enhance its technological innovation (Zhang & Duysters, 2010). These collective learnings allow Huawei to acquire and assimilate essential advanced knowledge to increase its global profile. Communication Organizational scholars have long acknowledged the importance of the communication process in enabling successful organizational change. Lewis et al. (2009) in particular, demonstrate how communication can enhance understanding of change implementation activities. Huawei has established information and communication channels to ensure timely acquisition of information, including its online forum for employees, communication channel for customers & suppliers, and the management meetings at all levels. Managers and process owners regularly organize training programs on business process, internal control to ensure information is up-to-date and is available (Huawei Annual Report 2012). Huawei‟s quarterly magazine, Huawei People, is not only an inspiring read but a powerful communication vehicle – communicating the vision and inspiration for its company and its employees. - 14 - References - Armenakis, A. A., Harris, S. G., & Mossholder, K. W. (1993). Creating readiness for change. Human Relations, 46, 681-703. - Burke, W. W., Spencer, J. L., Clark, L. P., & Coruzzi, C. (1991). Managers get a "C" in managing change. Training and Development Journal, 45(5), 87-92. - Business Today. (2009 June). Huawei Technologies a Chinese Trail Blazer in Africa. 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