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Choice, Chance, and Unintended Consequences in Strategic Change: A Process Understanding of the Rise and Fall of NorthCo Automotive (MacKay, Chia, 2013)

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R. Bradley MacKay, Robert Chia

Academy of Management Journal 2013, Vol. 56 No. 1, 208-230

JLJ - Chia-ideas enhanced by a typical, boring business-school-type case study, no doubt provided by MacKay. Chia regurgitates his canned ideas on organizing that he has been peddling, like a sidewalk watch-salesman, for years.

Prominent is the restated Chia-idea that we need a philosophy to understand change that is different from the traditional view that it is a temporary transition of sorts between periods of relative stability. We see the Weickian concepts of agility and mindfulness, and the de Geus-type scenario planning as prescriptions for the change-infected patient.

TMT - top management team

p.209 the in situ responses of agents themselves, rather than preexisting external environmental conditions, can generate unanticipated consequences that eventually end up facilitating or thwarting organizational aspirations.

p.209 Merton... he meant that choices made in dealing with perceived immediate concerns can create longer-term ramifications. So, unintended outcomes and states of affairs may arise, not from sheer environmental forces, but from the interaction of deliberate choices made by organizational actors with chance environmental circumstances. It was thus the organization's very act of choosing a particular course of action that generated the unintended consequences it subsequently faced.

p.209 choice, chance, and environmental circumstances interact to produce both positive and negative unintended consequences that influence organizational outcomes in the most unexpected of ways.

p.210 Our objective is to demonstrate that intended actions interacting with chance environmental circumstances can result in changes that produce unintended consequences that, in turn, can be decisive in shaping the fortunes of an organization.

p.211 Potentially, therefore, what is excluded from immediate attention because of the "imperious immediacy of interest" (Merton, 1936: 901) can always return as the source of unintended consequences in the future as circumstances unfold.

p.212 a manifold of small changes can have cascading and disproportionate consequences as the full force of their aggregation is realized. Small adjustments... can cause unexpectedly large outcomes... In summary, several tenets of an unowned processual orientation to strategic change can be identified. First, change is accorded primacy over social entities; stable states are themselves viewed as causal "effects" of unowned fluxing processes. Second, every decision made and every action taken are necessarily partial and hence bring with them the possibility of unintended consequences occurring in the longer-term future... Third, there are latent possibilities with every small change, for such changes can have profound, wide-ranging effects in the longer term. Fourth, there is no perdetermined underlying stable order in the often complex, confusing, and uncertain organization-environment nexus. Order can emerge spontaneously and evaporate just as quickly, often with dire consequences.

p.212-221 [boring case study about aftermarket automotive supply company]

p.221 With high volumes of orders coming in, NorthCo would have returned to profitability, but without the credit facilities to get their supply chain moving, the TMT once again found themselves in the position of being unable to finance the new growth.

[JLJ - big unanswered question: if NorthCo 'would have returned to profitability', why did the banks choose not to loan them money? Perhaps the banks sensed the impending collapse of the automotive industry - they sensed that NorthCo would not return to profitability. Perhaps even NorthCo's whole existence was doomed from the start - competitors might have chosen not to enter that line of business (or compete directly with NorthCo's product line) because they sensed the impending collapse of that particular market. Each business has to adjust to a changing market in order to survive - it is not enough to complain about failure to 'get credit'. The NorthCo executives could have reduced their salaries (and moved to cheaper offices) in a bold effort to lower overall product costs and rapidly increase market share. A larger company could then diversify - perhaps into products totally unrelated to the automotive industry. We would not then hear the (constant, it seems) NorthCo whine about 'not obtaining financing'.]

p.221 After 40 years of business, NorthCo Automotive was overwhelmed by a tsunami of events... NorthCo filed for bankruptcy [JLJ - perhaps failure to diversify was the main reason.]

p.221 We began by asking how chance, relentless change, environmental circumstances, and unintended consequences can collude to shape organizational destines, despite the very best managerial intentions and decisions. Our purpose has been to progress a perspective on strategic change that takes into account the presence of unowned processes that can undermine intended organizational outcomes. [JLJ - just because something is "unowned" does not allow one the excuse of being "unprepared" for the unexpected consequences. This is where diagnostic tests of adaptive capacity and scenario planning come in handy. When you choose the behavior of not performing mindful and informed scenario planning, including simple diagnostic tests of adaptive capacity, you choose the consequences, however unintentional, of that behavior.]

p.221-222 NorthCo's strategic choices at each point in the saga, born of an "imperious immediacy of interest" (Merton, 1936: 901), contained the seeds of the company's downfall, as it eventually became overwhelmed by the unintended consequences of its TMT's very own strategic actions.

p.223 in a world of constant change and flux, a new set of philosophical assumptions may be needed to understand processes of strategic change. What is being offered here is an alternative unowned process view that recognizes the importance of action, interaction, spontaneous change, and their unintended consequences... "Choice" and "environment" are not separate from one another; instead, the one constitutes the other to which a response is subsequently made. Outcomes in themselves... are thus only temporary stabilities located in hindsight in a relentless changing reality.

p.223 Choices... entail an arbitrary operation of "cutting off" (Whitehead, 1929: 58-59). Choosing is fundamentally an ontological act of selective attending-to in order to remove "equivocality and thereby help to configure a version of reality to which we then subsequently respond" (Chia, 1994: 795)

p.223 the environment "arises from a decision for it" (Whitehead, 1929: 58; emphasis added). As a consequence, all choices generate an excluded "surplus" or "remainder" (i.e.. what is not attended to, suppressed, ignored, or relegated in importance) that then serves as the origin of unintended consequences that then costructure the possibilities and thus the outcomes for organizations.

p.224 we argue that to understand processes of change in management and organization, particularly in nonlinear contexts, process must be understood as the unowned primordial driving force behind change, and things, events, and stable states must be understood as simply temporary manifestations of this ever-fluxing milieu.

p.225 Our conclusion is that advocating an unowned process analysis of change in organization and management involves embracing and acknowledging reality as indeed chaotic, complex, fluid, sometimes random, frequently messy, and often surprising in its emergence.

p.226 An unowned processual approach requires cultivating sensitivity to the periphery, where black swans that broadside even the most well intentioned managers often originate. Scenario thinking, unlike forecasting, for instance, entails the generation of alternative plausible outcomes for choices taken. Scenarios intimate the ever-present possibility of otherness and alert organizational actors of the possible unintended consequences of decisions made to resolve immediate concerns. They also serve as a counter to selective blindness in scanning the environment... We therefore suggest that cultivating an internalized agility and mindfulness involving ongoing creative adaptation as modus operandi based on an "unowned" process orientation is a more effective approach for dealing with the unintended consequences of action in a messy and constantly changing world.

p.227 It was a series of incremental and unexpected accumulations of circumstance, chance events, and unintended consequences that in the end downed NorthCo. This, we argue, is more typical of what actually happens in the world of strategic change in organization and management.