Managerial Dilemmas

Managerial

Dilemmas

Managerial

Dilemmas

Exploiting Paradox for

Strategic Leadership

John Storey

Graeme Salaman

A John Wiley & Sons, Ltd., Publication

Published in 2009 by John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester,

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Copyright © 2009 John Storey and Graeme Salaman

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Library of Congress Cataloging-in-Publication Data

Storey, John, 1947–

Managerial dilemmas : exploiting paradox for strategic leadership / John Storey, Graeme Salaman.

p. cm.

Includes bibliographical references and index.

ISBN 978-1-4051-6027-8 (cloth)

1. Leadership. 2. Organizational behavior. 3. Strategic planning. 4. Decision making.

I. Salaman, Graeme. II. Title.

HD57.7.S758 2009

658.4’092–dc22

2009007435

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

ISBN 978-1-4051-6027-8

Typeset in 11 on 15 Goudy by SNP Best-set Typesetter Ltd., Hong Kong

Printed and bound in Great Britain by TJ International Ltd, Padstow, Cornwall

Dedication

This book is dedicated to Anne, Rebecca and David, Rena, Sophie and

Alexandra.

Contents

Preface xiii

List of case organizations xvii

About the authors xix

PART 1 INTRODUCTION 1

1 Exploiting dilemmas and paradoxes through a new

mode of leadership 3

Meanings of dilemmas and paradox 12

The exploitation of paradox 12

Types 14

Dilemma/paradox 1: strategy and business models 17

Dilemma/paradox 2: organizational structuring 18

Dilemma/paradox 3: performance and control 19

Dilemma/paradox 4: innovation dilemmas 19

Dilemma/paradox 5: managers’ knowledge 20

Dilemma/paradox 6: organizational change 20

The role of leadership 21

Conclusions 23

Organization of the book 27

2 The nature of dilemma and paradox 29

Dilemma and paradox 29

Experiencing dilemma and paradox 31

viii CONTENTS

The organizational level 33

Visualizing dilemmas 35

The subjectivity of dilemma and paradox 39

Exploiting dilemmas and paradoxes 40

Managing paradoxes 43

Conclusions 44

PART 2 THE SIX DILEMMAS AND PARADOXES 47

3 Dilemmas and paradoxes of strategy 49

Strategy and capability 50

Business and organizational models 53

Strategy and organizational design 56

Two case studies: EngCon and contract cleaning services 58

Case 1: The engineering consultancy company 60

Case 2: Commercial and industrial cleaning and

support services contractors 69

Discussion 77

4 Dilemmas and paradoxes of organizational form

and structuring 81

From bureaucracy to market 87

Project management 91

Process management 93

Joint ventures and alliances 97

Strategic outsourcing 98

Supply chain management 101

Networks and virtual organizations 102

Conclusions 105

5 Dilemmas and paradoxes of performance management 109

The meaning and implications of performance management 113

The paradox of control 115

The performance control process 116

The social complexity of the process 118

Types of control 119

Direct supervision 119

Technical controls 121

CONTENTS ix

Administrative controls 122

Quality and Just-in-Time manufacturing 124

Incentive payments as a form of performance management 125

Self controls and social controls 126

Control and resistance 128

The vicious circle of control 129

Positive responses to controls 130

Reconciling control and autonomy 131

Performance and management systems 131

The wider context 133

Conclusions 135

6 Dilemmas and paradoxes of innovation 137

Introduction 138

Innovation issues 139

Business strategy and the management of innovation 140

Barriers and enablers 141

Exploration versus exploitation 143

The role of established cognitive structures and recipes 144

Our fi ndings about managers’ use of theory and the choice

between two divergent models 146

Managers’ interpretations of the nature and priority

of innovation 150

Different interpretations and their consequences 152

The moral and affective dimensions 153

The illegitimacy of innovation? 154

Analyses of the source of the problem 155

Formal and informal systems 157

Informal systems 158

Organizational cultures 159

Mindsets and values 162

Approaches to innovation: a danger to be controlled or

energy to be tapped? 163

Loose/tight 164

The value of searching 165

The role of leadership 165

Conclusions 166

x CONTENTS

7 Dilemmas and paradoxes of managers’ knowledge 171

Fads, fashions and prevailing assumptions 174

Developing strategy: the role of executives’ knowledge

and thinking 177

Why are executives’ ideas powerful? 179

Tacit knowledge and explicit knowledge; consensual

knowledge and differentiated knowledge 180

Findings about executive managers’ strategic knowledge 183

Type 1: common unexplored understandings 184

Type 2: divergent, submerged/unexplored confl icts 187

Type 3: negotiated action 189

Type 4: manifest confl ict 191

Conclusions 192

8 Dilemmas and paradoxes of organizational change 195

Introduction 195

The nature and sources of change paradoxes 198

The knowledge and role of managers 199

The nature of organizations 200

The objectives of organizational change projects 201

The paradoxes of change processes 204

Why change? The relationship between organizational

capacity and organizational strategy 205

Why change? Basic systems 208

Why change? Core competences 209

Why change? The adaptive organization 211

Why change? Strategic capacity 214

Key change problems and solutions 215

Key change problems: organizational capacity to change 215

Key change problems: symptoms and sources 216

Key change problems: changing how we change 218

Key change problems: changing the organization or

helping it learn to change? 219

Conclusions 220

PART 3 CONCLUSIONS 223

9 Implications for leaders of organizations 225

Dilemmas and paradoxes of strategy and of business models 229

CONTENTS xi

Dilemmas and paradoxes of organizing 233

Dilemmas and paradoxes of performance management 233

Dilemmas of innovation 234

The paradoxes of change 236

Cross-cutting applications and a summary of lessons

for leaders 237

References 243

Index 253

Preface

This book is no ordinary textbook on management. We do not seek to cover,

summarize and comment upon the vast literatures on the various key mana￾gerial themes covered in this volume. Our aim is rather different, namely,

to pursue a central theme and a core tension in managerial work and mana￾gerial decision making: managerial dilemmas and paradoxes. Our purpose is

to speak to practising managers and advanced students of management so

that they can refl ect more deeply than is normally encouraged, upon certain

underlying currents running through management practice. The book is

especially written with the needs of MBA students in mind and for those

taking courses in Organizational Behaviour and Strategic Management in

particular.

We seek to respond to the challenge presented by Chris Argyris ( 1999 : 92):

If paradoxes are an important phenomenon for administrators … why is it

that the prominent theories of administration or organization do not have

them as a central focus? What would it require to craft theories where paradox

has a prime role?

Duality is a constant strand in management thinking and in thinking about

management and organizations. Organizations are thought of as mechanistic

or organic, as centralized or decentralized, formal or informal, differentiated

and integrated, stable and changing and so on. Business strategies likewise,

are typically thought of in terms such as low cost or premium, strategies as