A Case Study on the Change of an IT Company in China
From the Perspective of Ideal Types of Process of Organizational Change
CoCo Research Centre, University of Sydney, Australia
I used to work at Longxing Information Technology Company in China as an educational project designer, an innovative position in the company. The main product of the company is School Messenger, a system helps communicate between school teachers and parents via mobile phone and internet. This kind of product, including its business mode (see Figure 1), is so successful in China that more and more IT companies have started to get involved in this domain and tried to take up as more market share as possible.
Figure 1: the Basic Business Mode for School Messenger
With School Messenger, teachers can send SMS to parents on line easily and parents can make feedback to a specific teacher immediately. The content of the message are mainly about the performance of the kids, homework, school notice, guidance for family education, etc. The system also records all the information of students that their teachers and parents write. Furthermore, new teachers of a class can get aware of the situation about their students by looking through the records easily. So long as having enough computers in teachers?offices, most schools including kindergartens would like to accept this free service and let parents pay for it through their mobile service providers, China Mobile and China Unicom, which are the two monopolizers of mobile service in China. Parents reserve the right to accept or refuse the service but they have one semester’s trial before making decision.
As Longxing was the first few companies exploited this service in China several years ago, so it has developed a large number of contracted schools and parents users and got stead monthly cash income. At the same time, Longxing kept outspreading its branches in other cities to develop its business.
Based on this, the CEO of the company was thinking two problems:
(1) How to persuade more parents to subscribe for the service? Although many schools leaders had tried their best help promote this service and let Longxing arrange client service representatives to hold lectures in schools and even at parents meetings, some parents (35% averagely) still refused to pay for this service and some of them even had no interest in the free trial.
(2) How to utilize the current good marketing channels to produce more profit? Since the company had developed some many fluent marketing channels in educational domain, it would be a great waste if Longxing only sell the service of School Messenger in the marketing process.
In order to solve these two problems, the boss decided to create new positions for those who were good at both education and information technology. Then I became one of the team of three educational project designers and our direct boss was the CEO. At that time, we tried to change our company’s mission from providing good tools for communication to providing good educational value. To achieve this, we mainly promoted the change process of the company by the following approaches:
(1) Products: exclude the system of School Messenger, we try to develop other educational projects such as training courses, summer camp, reading festival, lecture, family education counseling conference, etc.
(2) Client Service: our client service representatives should not only provide technical support and promote the sales in schools but also guide teachers for appropriate usage of the system for educational purposes. At the same time, they offered more help for parents when they got trouble with communications with the schools.
(3) Management: a. to create more positions for the change and to clarify the descriptions of the jobs; b. to provide more training courses on education and psychological for our client service representatives in summer and winter holidays; c. adjust the criteria of evaluation, especially for client service representatives.
More details about the change will be included in the section of Analysis.
Poole et al introduced four different types of process theories that explained the change behaviors in organizations: life cycle, teleological, dialectical and evolutionary. They suggested that these four basic types of theories were adequate alone or combined to explain all specific theories of organizational change and development. (Poole et al, 2000)
Changes in an organization concerning educational industry and informational industry usually have a complex process which can be observed and analyzed based on different aspects. So in this section, I would like to use Poole et al’s theories to seek for deeper insight into the case.
(1) Life Cycle Theory
The life cycle theory assumes that changes are imminent. The outside events and processes may affect the development, but they are still filtered thorough immanent logic. There exists in advance path that depicts the trajectory until the end state. In a life cycle, the change experiences 4 stages which are Startup, Grow, Harvest and Terminate. (See Figure 2)
Figure 2: Life Cycle Model (Poole et al, 2000, p. 66)
In the case of Longxing, macroscopically the company was in Stage 2. Since it has developed enough amount of contracted schools and effectively prevented potential competitors’s inbreak in Stage 1 ?Startup, then it was time for it to make full use of these contracted schools and to improve their products and services. Microscopically, the old mode of operating the service of School Messenger, mainly providing just a tool for teachers and parents, had come to Stage 4 ?nbsp;Terminate while an updated mode of services was to start in a new life cycle.
I think Figure 3, which is a business life cycle mode, may integrate these two perspectives?characteristics rather than using two cycles to describe.
Figure 3: How Businesses Grow (Resource: http://www.empowersolutions.com.au/Business_Growth.shtml)
Longxing was then in the state of Growing pains in which the company had to look for new approaches for further development that might determine whether Longxing went continually to Maturity and Decay or met its 2nd Youth.
Hence, it is obvious that the CEO was pretty wise to lead the significant change when Longxing met the two main problems described above.
(2) Teleological Theory
Teleological Theory indicates that the development of an organizational entity proceeds towards a goal or an end state. Purposeful cooperation is the grounding idea behind the teleological theory where the goal formulation, implementation, evaluation and modification of goals based on what was learned repeat in a sequence. Also the developing entity is purposeful and adaptive, by itself or in interaction with others. This theory allows the participants to be more innovative and free to choose their goal as well as their means to achieve it.
Figure 4: Teleological Model (Poole et al, 2000, p. 66)
Analyzing based on Figure 4 ?Teleological Model, we can find that the subsequent changes on products, services and management in Longxing were led from the goals that the CEO set. The new team of stuff reified the thoughts about dissatisfaction and set the goals for solutions in detail.
However, actually we found out that there would be many problems in the process from Set/Envision Goals to Implement Goals where we might have not enough privilege to utilize every resource that we needed, e.g. we could not ask client service section for too much previous users?data, could not do what human resources managers should have done (e.g. composing descriptions for new positions and adjusting the evaluation criteria), etc. This is the risk for Teleological Model, as the company may fail to control the processes in an envisioned manner. In most situations, those processes leading to significant changes need more authoritative leaders involved in. As designers, sometimes we could only stand aside and saw what was happening when the boss was too busy to manage everything.
So for the case of Longxing and similar situations, the emphases are not noticing the dissatisfactions but making sure those who concerned keep going in the right ways to achieve the goals under the supervision of their bosses, especially for significant and fatal changes.
(3) Dialectical Theory
Dialectical Theory explains stability and change by reference to the relative balance of power between opposing entities. Stability is produced through struggles and accommodations that maintain the status quo between oppositions. Change occurs when these opposing values, forces, or events gain sufficient power to confront and engage the status quo. The relative power or legitimacy of an antithesis may mobilize to a sufficient degree to challenge the current thesis or state of affairs and set the stage for producing a synthesis.
The thesis and antithesis which made Longxing come to an internal conflict, were two different believes: instrumental rationality and value rationality. If we considered we were providing tools for teachers and parents to communicate, we should give great effort on improving the technical functions of the system and try our to produce tools to help teachers?and parents?controlling the children. If we turned to consider that we were to create and convey educational value for students, we should invest in training our client service representatives to be educational exports who could provide professional guidance for teachers and parents to utilize the tools in appropriate ways.
We noticed that many teachers just send all the information about the children to their parents directly without further instructions, e.g. telling the parents that their kid was late for school or did not finish homework but not making any suggestion indicating what parents should do at home based on the situations. As a result, more and more children hated this service and parents then felt that the service always made them in trouble or embarrassed. All these things led to a synthesis after the conflict in which we still reserved the main functions of the system but create additional features helping teachers and parents achieving their educational goals.
(4) Evolutionary Theory
Evolutionary Theory explains change as a recurrent, cumulative, and probabilistic progression of variation, selection, and retention of organizational entities. This motor is prescribed in the sense that one can specify the actuarial probabilities of parameters in differential equations to explain reproduction processes or the changing demographic characteristics of the population of entities inhabiting a niche. While one cannot predict which individual entity survives or fails, the aggregate population persists and evolves through time according to the specified population dynamics.
In terms of evolution, I think many rules in business are similar to the nature. Those companies?turnover cannot bear the cost may go bankrupt soon. Furthermore, companies should also pursue potential extra profit and avoid possible risks. If Longxing insisted on the old mode of service, it might be abandoned by the customers later. In order to "be selected" by the world of business, Longxing always try its best to adjust the way of development.
Evolutionary theory not only explains the change of an organization, but also reminds us to be stronger! Or we might become history!
(5) Composite theories
It may be not enough for one theory mentioned above to describe and explain most phenomena of the case. Now I try to compose these two or three theories to demonstrate some specific arguments of the case.
a. Interaction of Life Cycle and Teleological Motors. As seen in Figure 3, while the whole company was in a specific stage of the business cycle, there should be relative goals for it to achieve. For example, when it was in the stage of Start-up, one of the important goals was to snatch the market share as soon as possible by making contracts with schools. When it had come to stage of Growing Pains, its goals were to solve emerging problems and to prepare for its 2nd Youth.
b. Interaction of Life Cycle, Teleological and Evolutionary Motors. We may ignore the cycles for Longxing’s product modes themselves when we discuss their development on the assumption that this kind of product is reasonable from the initial state. However, there had been a difficult time for Longxing when this product was still not accepted by the government. The precondition of its development is its validity by law. The disputes about whether School Messenger could infringe children’s privacy and whether it might lead schools leaders to accept rake-off, were the barriers for Longxing at the beginning. In order to continue their business, it should be "selected" by the environment, e.g. getting support from the government. The process of changing the infaust situation could be accelerated by evolutionary motors. Since this be clear, then we can easily get aware of it later development from the perspectives of Life Cycle and Teleological Theory mentioned above.
I have thought that the change in Longxing could have been more successful if its organizational learning mode could be more reasonable. Though history does not allow any "if", I still try to discuss it here with the theories of Single- and Double Loop Learning (Argyris, C., & Schon, D. A., 1996, pp. 20-25).
By single-loop Learning, we mean instrumental learning that changes strategies of action or assumptions underlying strategies in ways that leave the values of theory of action unchanged. By double-loop learning, we mean learning that results in a change in the values of theory-in-use, as well as in its strategies and assumptions.
Having decided to adjust the business strategies, as an agent of Longxing, the CEO started up the organizational learning within the whole parent company. Selectively referencing the suggestion from we educational project designers, he asked every stuff concerned to discuss and explore his new ideas on the changes of products, services and management. Then they made up new decisions together at the end of every weekly meeting that period. Their learning model was like Figure 5.
Figure 5: Learning Model in Longxing
The CEO did know that the previous values and norms of the company needed to be adjusted. However, he failed to redefine the problems which helped create new appropriate plans for next actions. This means he did not lead the organization to complete the whole double-loop learning.
Our team has done this for him but he did not accept it and refused to admit the redefined problems. What we suggested was that it would be benefit for the company to set up a isolated department for educational project which could be developed to a isolated educational company becoming a member of Longxing Group. Then the goal for Longxing should be Longxing Education? This might help to promote its new educational belief and brand. Nobody would trust an IT company’s own educational belief but the society may accept an educational organization’s technological product and other additional services.
However, our boss did not think the original framework of an information technology company and its branches might be the original causes for potential failure of educational projects held in the future.
Therefore, the changes of values and norms were still kept in the staff”s mind. What they did still obey to the framework of a typical IT company. So the speed of the reform remained low?
When we apply the Poole et al’s theories to analyze a case, we may find out its reasonableness. However, when the theories can explain the episodes satisfactorily and even perfectly, does it mean what the dramatis personae in the case has achieved the optimal status based on the given situation? Sometimes, it would be better than we could imagine.
On the other hand, though we know the optimal status and the approaches to achieve, we still don’t do that. Why? This is because sometimes a change of a bad habit may be worse than the bad habit itself! Who could bear the responsibilities for the devastating consequences if the organizational change was too innovative? Hence, though insist that Longxing could be much better now if it set up completive double-loop learning rather than single-loop learning, I can also accept the middle course and I don’t think the CEO did any wrong.
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Poole, M. S., van de Ven, A., Dooley, K., & Holmes, M. E. (2000). Organizational change and innovation processes. Theories and methods for research. New York: Oxford University Press.
Empower Business Solusion. Business Growth: Where is Your Business?. http://www.empowersolutions.com.au/Business_Growth.shtml