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Fred Bigjim – Reflection

by on October 11, 2007

Today as I was watching NBC nightly news there was a very interesting story that relates to change management. This particular expose’ concerns foreign organizations buying out American companies here in America.
The Heart of Change book stresses the fact that change may happen fast and that organizations must stay in tune with the current state of affairs of business. The book does address the complexity of change concerning mergers or business acquisitions in some of the case studies; however these case studies seem to be limited to one organization of the same culture buying out another within its culture. For example one American company acquiring another American company or just as general, the concept of reducing costs by outsourcing to foreign firms is also discussed.
What has not been discussed in class or in the book is the new business climate of foreign firms buying out American firms and the potential for that to create a new form of complexity beyond just the underlying concepts explored in the book. For the Heart of Change book it could be an example of the time which it was published. In 2002 when the book was published there was not much news of foreign firms buying out American firms. Therefore why included case studies concerning the matter. In fact I would guess at the time of publication it was still considered an anomaly and that the norm was American firms partnering up with foreign firms in other countries.
What I found most interesting about the short expose’ is how quickly things have changed just since 2002. Now according to the story one in every four corporate buy outs in America is from a foreign firm buying out an American firm and how just last year approximately 800 American firms were sold to foreign investors and how the decline of the American dollar has helped to create this sort of climate here in America. Two of the stories I used for my news article examples had foreign firms buying out American firms this summer. I wrote about how Acer from Taiwan took advantage of Gateway’s financial problems and bought out Gateway and how Rupert Murdoch is currently in the process of buying out the Dow Jones Corporation.
When I decided on those articles it was because I thought it would be interesting from a change management perspective as far as one company acquiring the resources of another and how the two companies will approach the challenge of merging.
After viewing the news expose’, I am now more interested in how one firm with a traditional American approach to operating will react and change when acquired by a firm from a completely different culture.
The news story interviews a few people from the mid west and these people do express concern. How would the Heart of Change book address the “eight steps for successful large-scale change” under these new circumstances?
I believe that at least the first three steps would have to be re-thought in order to successfully accommodate how American workers will and or are adapting to being bought out by foreign firms from all around the world with possible very different cultural approaches to how business is conducted within large scale organizations. Instead of step one being increasing the urgency – I would guess it may in fact almost be opposite.
If an Arab firm buys an American plastic plant from GE as in the story I doubt that the management would want to create a sense of fear amongst departments. After all it is a business venture and for it to be worth the risk it would make sense to want to keep the valuable resources that made the acquisition attractive in the first place. Therefore, this would create a change atmosphere of wanting to reinforce people that for the time being operations will continue as normal and that there are not any urgent or radical changes in the works. This approach I believe would help to prevent or limit any organization wide fear and would help to lower the risk of losing valuable workers, clients, contractors, or even customers during the ownership transition stages.
I believe that one way to help keep fear to a minimum, in such examples as shown in the story, would be to make use of guiding teams communication routes to the workers. Only these management teams may want to emphasize that there is nothing to fear because as discussed in class these people are known to the workers so possibly the message coming from them would have more credibility to the workers as opposed to the message coming from a new foreign CEO. So instead of being a team to guide or drive a new vision of change during a possibly tense change period they would instead be utilized to help maintain organization productivity while at the same time instilling faith in the workers that the new outside owners are not intent on making drastic changes that will directly affect them on a personal level. An example of this appears in the story when a high level manager is being interviewed in Boston and presenting the new foreign owners as a welcoming and supportive addition to their day to day laboratory operations. He reinforces the idea that things continue locally as normal for everyone and that the change is more in name as opposed to how management operates the organization.
Even though the obvious change is one of going global; I am not sure that foreign firms use that as a vision during these types of organization change periods. Sure it is understood by the people in the firm that are being bought out that they are part of a global market, but at the same time I would guess that the leaders in the foreign firms would want the Americans to at least within the company rhetoric to think that they were still more of an American firm as opposed to being for example the American branch of a global Asian corporation.
Step four; communicate for buy-in, I believe takes on a slightly different meaning in such situations. The principal remains the same as far as convincing people that the change will be successful, but I believe it becomes more personal to the individuals involved when that change is one of foreign ownership and for that reason I think how buy in is communicated in these situations may need to be well thought out and delicate. Especially for Americans that are a part of certain industries that have traditionally viewed foreign competition as the enemy.
Also, the more extreme the cultural difference between the new owners and Americans would make for a more challenging buy-in campaign. An example of this is was when the Dubai firm attempted to buy American ports last year and the negative public reaction which resulted from it. Many ports are owned by foreign organizations. However, I believe cultural perceptions still play a role because there was not any national news protest when American ports were bought by firms from more western countries such as Spain.
I do feel that once the fear is calmed that step five of empowering action also takes on a different meaning in such situations. As opposed to just attempting to encourage people to act towards a change management vision, you are asking people to act on a new foreign ownership vision. I believe that this step is more essential in such situations because if not approached properly it could have even more unforeseen negative results than discussed in the book. My reason for stating so is because although American firms being bought out by foreign firms is not new, what is new is the increased rate for which it is currently occurring. The more it continues the more chance for mistakes. The more that happens the more likely people will begin to fear the idea of new foreign owners and that will only make the previous steps that much for difficult to accomplish because again I believe that it is the organization wide calming of most types of fear that could be what is most important to the success of foreign firms buying outs of American firms, not the creation of fear.

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