ISCAR Inventing the future 2014

Analysing power and resistance in firm’s strategic

management – a methodological perspective

Co-writer> Juha Tuunainen, assistant professor, Oulu UniversitySupervisor: Yrjö Engeström, Helsinki University, professor and director of CRADLE

Hannamari Heino, Helsinki University ,CRADLEM.Sc. (econ), M.Sc. (educ.), PhD candidate

My background M.Sc. (econ) Finance ABM certificate (approved board

member) Positions as CFO, secretary of board

of directors, accountable director, member of advisory board

Growth strategy, acquisitions, strategic management,

Industries: HoReCa, real estate, food industry (coffee), professional services

Activity theory (M.Sc. Educ.)

Objectives of the article

To identify the expressions of resistance

To indentify potential structural and/or managerial shortcomings

To discuss resistance in relation to strategic performance

Strategic management process

Primary contradiction

Company’s real value

vs. targeted value

STRATEGIC ANALYSIS

Strategy

revision

STRATEGY IMPLEMENTATION

Strategyimplementatio

n

Strategic

analysis

Strategic

Choice

Strategy research outcomes e.g.

90 % of good strategies fail because of weak execution

The most difficult obstacle: Inability to overcome resistance and direct the change

Gaps in strategy research

Power as relational but management’s possession

Resistance something to be overcome

No empirical research or methodological concepts for resistance as a positive force

The power school and SaP

Linking to activity theory in organisation studies

Labour process theory | Spicer & Böhm (2007)Procedural perspective | Pettigrew (1997)Dialectic process theory | Van de Ven (1992)Field theory | Kurt Lewin (1997)Rhizome | Deleuze & Guattari (2005)

Contribution of activity theory

Agency Resistance Contradictions

Finnish flag carrier Finnair

Finnair - Strategic changeIndustrial - Low cost carriersChallenges - The price of fuel

New strategy - Growth strategy in Asia

- Yield management program of

100 m€- Cost saving

program of 200 m€

Research Data - Media: TV debate, journals

Expressions of resistanceUnion worker:”The top management does not participate in a way we expect. They should serve as an example and demonstrate that they trust to this strategy”

Top manager :”The same cost reduction model is not convenient for management. And board of directors has been making cuts in management salaries and some re-arrangements. Our presentation is reasonable”

Expressions of resistanceWorker:

“we have sold profitable companies”“we are still in the same situtaion than year 2006””the management’s strategic decisions cannot be trusted”

Top manager:

“we have done a lot in relation to the radical changes in the industry”“we have been very successful, I can say that Finnair is operationally the best airline in the world”

Current situation

• Negotiations ended without an agreement

• The gap: 12 m€ - 18 m€ p.a.• 540 persons will be

outsourced• Turbulence in management • The board is going to make

every effort to start negotiations again

Activity system of Cabin Attendants

Resistance

Tools | Media, industrial actions

Rules | Management

power, strategic objectives

Subject | Cabin personnel

Community of Cabin Attendants

and union representatives

Object | To curb the wage cuttings

Division of labour

Targeted activity systems

Rules

Subject | CAs

Community

Partially shared object

Division of labour

Subject | Top mgmt

Division of labour

CommunityRules

Tools | Cost saving program 18 m€ -> CAs

Tools | Cost saving program 12 m€ -> CAs + mgmt

Contradictions/Resistance

Resistance as a springboard for change

1. Resistance (e.g. criticizing)2. Questioning3. Explicating new possibilities or

potentials in the activity 4. Envisioning new patterns or

models of the activity5. Committing to concrete actions

aimed at changing the activity6. Taking consequential actions to

change the activity

Haapasaari et al. (2014)

Challenge of 12 m€ versus 18m€

Management’s higher proportion? Common (and correct) calculations? Partially shared strategy discussions?• Premium, Hybrid, Low cost?• Innovative strategy solutions?

Strategic objectives versus the power of reputation?