Everyone knew Nabisco would be in charge after the deal; it was by far the stronger player. But they underestimated Ross Johnson. He was so successful at ingratiating himself with Nabisco’s chairman, while quietly shedding the old Nabisco executives, that he was able to take over the company after a few years. Once in charge, Johnson showed more interest in hobnobbing with celebrities than in running the business. And then, in 1985, he received another call: Tylee Wilson, chief executive of R.J. Reynolds, the huge tobacco company, wanted to talk merger. Wilson needed a corporate partner to help Reynolds reduce its heavy dependence on the tainted cigarette business. Johnson held out for more than Wilson wanted to pay, but the deal was soon done: Reynolds coughed up $4.9 billion for Nabisco.
Although more than one of his friends warned him about Johnson, Wilson !gured it was his deal, and he would be in charge. But Wilson, who lacked Johnson’s awesome skills at ingratiation, had alienated some members of his board. After cultivating alliances with board members, Johnson used the same gambit that had worked at Standard Brands. He told friends on the board that he would be leaving because there was room for only one CEO. A few weeks later, Wilson was startled when his board pushed him out.
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Political Dimensions of Organizational Processes As arenas, organizations house contests and set the stakes, the rules of the game, and the parameters for players. In this light, every organizational process has a political dimension. Consider the task of shaping and structuring an organization. Theories built on the rational premises of the structural frame assume that the best design is the one that contributes most to ef”cient strategy and successful attainment of goals. Pfeffer offers an explicitly political conception as an alternative: “Since organizations are coalitions, and the different partic- ipants have varying interests and preferences, the critical question becomes not how organizations should be designed to maximize effectiveness, but rather, whose preferences and interests are to be served by the organization. . . . What is effective for students may be ineffective for administrators. . . . Effectiveness as de”ned by consumers may be ineffectiveness as de”ned by stockholders. The assessment of organizations is dependent upon one’s preferences and one’s perspective” (1978, p. 223).
Even though groups have con!icting preferences, they have a shared interest in avoiding incessant con!ict. So they agree on ways to distribute power and resources, producing settlements re!ected in organizational design. Structures are “the resolution, at a given time, of the contending claims for control, subject to the constraint that the structures permit the organization to survive” (Pfeffer, 1978, p. 224).
An example is a controversial decision made by Ross Johnson when he headed RJR Nabisco. Johnson moved RJR’s headquarters from Winston-Salem, where it had been for a century, to Atlanta. Reynolds was the commercial heart of Winston-Salem. It engendered “erce pride and loyalty among the citizenry, many of whom were substan- tial stockholders. Structural logic suggests placing your headquarters in a location that best serves the business, but Johnson and his key lieutenants saw the small city in the heart of tobacco country as boring and provincial. The move to Atlanta had scant business justi”cation, was unpopular with the RJR board, and made Johnson the most hated man in Winston-Salem. But he headed the dominant coalition. He got what he wanted.
Sources of Political Initiative Gamson’s distinction (1968) between authorities and partisans (see Chapter 9) implies two major sources of political initiative: bottom-up, relying on mobilization of groups to assert their interests; and top-down, relying on authorities’ capacity to in!uence sub- ordinates. We discuss examples of both to illustrate some of the basic premises of political action.
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Bottom-Up Political Action The rise of trade unions, the emergence of the American civil rights movement, the antiwar movement of the 1970s, environmental activism in recent decades, and the “Arab Spring” and Occupy Wall Street initiatives that began in 2011 all exemplify the process of bottom-up change. In every case, the impetus for change was a signi”cant disruption in old patterns. Trade unions developed in the context of the industrial revolution, rapid urbanization, and the decline of family farms. The civil rights movement arose after massive occupational and geographic shifts for black citizens. The antiwar movement emerged from the juxtaposition of an unpopular war with a draft lottery that affected every 18-year-old male in the United States. “Green” activism developed as the costs of growing prosperity—including pollution, destruction of habitats and species, and global warming—became increasingly visible and hard to discount. In each case, changing conditions intensi”ed dissatisfaction for disenfranchised groups. Each re!ected a classic script for revolutions: a period of rising expectations followed by widespread disappointment.
The initial impetus for change came from grassroots mobilizing and organizing—the formation of trade unions, civil rights groups, student movements, or environmental groups. Elites contested the legitimacy of grassroots action and launched coercive blocking tactics. Employers often resisted unions, using everything from lawsuits to violence. The civil rights movement, particularly in its early stages, experienced violent repression by whites. Efforts to suppress the antiwar movement reached their apogee at Kent State University, when members of the Ohio National Guard “red on student demonstrators. Greens have been engaged in a long battle against business and political leaders who dispute the signi”cance of environmental threats and resist what they see as the excessive costs of proposed remedies. In every Arab Spring country, authorities tried to clamp down, producing thousands of deaths in Libya and Syria.
In every case, despite intense opposition, grassroots groups fought to have their rights embodied in law, policy, or political change. Some achieved success, but many ultimately failed to achieve their most important goals.
Barriers to Control from the Top The dif”culties of grassroots political action lead many people to believe that you have to begin at the top to get anything done. Yet studies of top-down initiatives catalogue many failures. Deal and Nutt (1980), for example, conducted a revealing analysis of local school districts that received generous, long-term federal funding to develop experimental
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programs for comprehensive changes in rural education. These projects followed a recurring scenario:
1.� The central administration learned of the opportunity to obtain a sizable chunk of government funding.
2.� A small group of administrators met to develop a proposal for improving some aspect of the educational program. (Tight deadlines meant that the process was usually rushed, with only a few people involved.)
3.� When funding was approved, the administration announced with pride and enthu- siasm that the district had won a national award that would bring substantial funds to support an exciting new project to improve instruction.
4.� Teachers were dismayed to learn that the administration had committed to new teaching approaches without faculty input. Administrators were startled and perplexed when teachers greeted the news with resistance, criticism, and anger.
5.� Caught in the middle between teachers and the funding agency, administrators interpreted teacher resistance as a sign of defensiveness and unwillingness to change.
6.� The new program became a political football. Teachers joined with parents, commu- nity members, and the school board in opposing the project’s primary goals. The ensuing battles produced more disharmony, mistrust, and con!ict than tangible improvement in education.
The programs studied by Deal and Nutt represented examples of top-down change efforts under favorable circumstances. The districts were not in crisis. The change efforts were well funded and blessed by the federal government. Yet across the board, the new initiatives set off heated political battles. In many cases, administrators found themselves outgunned. Only one superintendent survived over the program’s “ve-year funding cycle.
In most instances, administrators never anticipated a major political battle. They were con”dent their proposed programs were progressive, effective, and good for everyone. They overlooked the risks in proposing change that someone else was expected to carry out. As a result, they were showered with antagonism instead of the expected huzzahs.
A similar pattern appears repeatedly in other attempts at change from above. Countless efforts mounted by chief executives, frustrated managers, hopeful study teams, and high- status management consultants end in failure. The usual mistake is assuming that the right idea (as perceived by the idea’s champions) and legitimate authority ensure success. This assumption neglects the agendas and power of the “lowerarchy”—partisans and groups in
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midlevel and lower-level positions, who devise creative and maddening ways to resist, divert, undermine, ignore, or overthrow innovative plans.
ORGANIZATIONS AS POLITICAL AGENTS Organizations are lively arenas for internal politics. They are also active political agents in larger arenas, or “ecosystems” (Moore, 1993). Because organizations depend on their environment for resources they need to survive, they are inevitably enmeshed with external constituents whose expectations or demands must be heeded. These constituents often speak with loud but con!icting voices, adding to the challenge of managerial work (Hoskisson et al., 2002). As political actors, organizations need to master many of the basic skills of individual managers as politicians: develop an agenda, map the environment, manage relationships with both allies and enemies, and negotiate compacts, accords, and alliances.
An example is the “framing contests” (Gurses and Ozcan, 2015) that can arise between competing sides in a business battle. Uber, founded in 2009 by two young entrepreneurs in San Francisco, grew rapidly into an international powerhouse, with some estimates putting its value at more than $50 billion by 2015. Offering a new transportation option in cities around the globe, Uber found itself in pitched battles with regulators and incumbent taxi operators in almost every market it entered. Uber framed the issue as one of choice, innovation, customer service, and freedom from the grip of an antiquated industry. Opponents framed the contest very differently: a rogue operator was routinely breaking the law, ignoring public safety, and competing unfairly. Uber’s pattern—enter “rst and worry about legalities later—illustrates Funk and Hirschman’s (2017) argument that “rms use market as well nonmarket tactics to in!uence their policy and regulatory environment.
Uber’s most important allies were its customers, who saw the service as a big improvement over traditional cab companies. While writing this book, one of the authors phoned a local taxi company 2 hours in advance to arrange a ride to the airport. When the cab failed to arrive at the promised time, he called to learn that the company had lost track of the pickup but might be able to get him a cab in another 45 minutes. He switched to Uber. A genial driver in a late-model car arrived quickly and got him to the airport on time. Uber has leveraged similar customer experiences to build a powerful coalition that helps it win more battles than it loses and keep growing (Griswold, 2015).
Many of an organization’s key constituents are other enterprises. Just as frogs, !ies, and water lilies coevolve in a swamp, organizations develop in tandem in a shared environment. Moore (1993) illustrates this with two ecosystems in the personal computer business, one
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pioneered by Apple Computer and the other by IBM. Apple’s ecosystem dominated the PC industry before IBM’s entry. But IBM’s ecosystem rapidly surpassed Apple’s. IBM had a very powerful brand, and the open architecture of its PC induced new players to !ock to it. Some of these players competed head on (for example, Compaq and Dell in hardware, Microsoft and Lotus in software). Others were related much like bees and !owers, each performing an indispensable service to the other. One symbiotic pairing was particularly fateful. As Microsoft gained control of the operating system and Intel of the microprocessor in the IBM ecosystem, the two increasingly became mutually indispensable. More sophis- ticated software needed faster microprocessors and vice versa, so the two had every reason to cheer each other on. “Intel giveth, and Microsoft taketh away,” as some cynics put it. Two companies that began as servants to IBM eventually took over what became the “Wintel” ecosystem. IBM eventually dropped out of the business, and industry terminology changed to re!ect the shift in power—what were once called “IBM clones” and proudly advertised as “100 percent IBM compatible!” became simply “Windows PCs.”
Meanwhile, the Apple ecosystem, which nearly died in the 1990s, came back to life in stunning fashion early in the twenty-“rst century with the introduction of a series of highly successful mobile devices, including the iPod, iPhone, and iPad. Wintel continued to dominate the world of microcomputers, but most of the growth and excitement were in mobile. Microsoft was in the smartphone business before Apple or Google and invested billions of dollars in the business but fell to less than 1 percent market share by 2016.