Blue Sky Software Consulting Firm

Introduction
The assessment that Blue Sky just made a temporary adjustment to a bigger problem is correct. Right now, Blue Sky is facing a situation where they have new leadership, which is going to bring about significant culture change. There will be a lot of resistance, and some changes might be required, and painful. The organization is facing some changes to the external environment that are threatening the long-run viability of key businesses, which provides an impetus to bring about organizational changes. Perhaps the biggest challenges that Willis faces are internal, where there is a very ingrained culture that will be quite resistant to change. He will need to be very careful with respect to how this change is brought about, if it is to be successful.
Some of the issues are with personnel, some of them executives, so there will be a degree of interpersonal conflict, but then there is also the question of Willis’ mandate. He was hired by Max Blue as his replacement, but Max Blue is still the Chairman of the Board. So Willis has to navigate those political waters as well. Willis has at least one ally in Hubres, but she is probably still seen as an outsider, and is going to have to fight for influence.
Leadership Style
The former CEO was Max Blue, who had an autocratic style. He would often be willing to listen to others, but retained a highly-centralized form of decision-making. Iqbal, Anwar & Haider (2015) studied this leadership style, and found that it can be useful in the short run, but in the long run a more democratic leadership style is more likely to lead to higher performance. In the short run, the autocratic style can get things done, especially where there are seemingly intractable conflicts within the executive leadership team. This actually seems like the autocratic style might have merit in this particular situation for Willis, even if it is not his natural style.
Willis needs to bring about a transformation in the organization, certainly over the long run. Studies have shown that a transformational leadership style is more conducive than an autocratic style for generating motivation and higher levels of commitment in employees (Naile & Selesho, 2014). This implies that to bring about the needed changes at Blue Sky that will allow it to thrive going forward, a certain amount of transformational leadership behaviors will be required, despite the apparent need for autocratic leadership in the short run. The key is that it is going to be difficult to shift from autocratic to transformational quickly, that more likely the change will need to be at least a little bit gradual in nature, otherwise it might be too jarring.
It is imperative that Willis understands the role that leadership style plays in an organization. Blue Sky grew under a leadership style that probably was beneficial because it provided the company with a steady hand while going through its growth stages. But the company is now under new leadership and in terms of its strategy is also an at inflection point. It simply cannot continue either with the same leadership style, because Willis is not Blue, and because of the new external threats that the company is facing. Willis needs to adopt an approach to leadership that will position the company for success going forward.
Motivation
There were probably two main approaches to motivation for Blue Sky in the past. One was that people bought into Max Blue’s vision for the company. One of the elements of a more transactional approach to leadership, which is where the company probably has been in the past few years as Blue was heading towards retirement, is contingent reward (Khan, Nawaz & Khan, 2016). This is exemplified by the ownership stake that employees have in the company. The deal was really that if employees perform their jobs well, then the company will do well, and that will be a big part of their retirement funds. Now, the company has only been around for 15 years, so most employees will not be on the verge of retirement, which means that they still have a stake in a contingent reward system – the company still has to continue to do well for decades to come to see the employees to and through retirement.
If Willis intends to transition the company to a more transformational leadership style, then that will entail tapping into new and different sources of motivation. One of the main sources of resistance at this point appears to be that employees are risk averse, because their retirement funds are dependent on the ongoing success of the company. There’s an attitude of “if it ain’t broke, don’t fix it.” However, this attitude assumes that it’s not broke, which may not be the case at Blue Sky. The company does a lot of things wrong, like not having meetings and strategic planning, and if it has been successful to this point then some of that might have been Max Blue and some of it might have been dumb luck. Either way, that past success is not indicative of future success, and certainly not when the primary motivation for employees is to change nothing.
Willis needs to tap into other forms of motivation that the company has largely ignored, like intrinsic motivation and the motivation to achieve. Trust and building a group level of motivation have both been attributed to transformational leadership, and higher levels of motivation (Zhu & Akhtar, 2014). Motivating the employees may well have to start with trusting them, or at the very least trusting them to understand the situation that the company is in, and allowing them to contribute to figuring out the solutions. The culture of the organization might mean that they still want to present their solutions to Willis and have him make the final decision, but Willis can change that over time as well.
Strategic Planning and Decision Making
Strategic planning hasn’t really changed yet at Blue Sky. Max Blue didn’t do strategic planning, so there was none. The proposal on the table right now is to actually start doing strategic planning. This is a necessary change. The strategic planning process involves looking forward at the external environment, and taking steps today to address the challenges that will occur in the future. Karadag (2015) notes that strategic management is an important component to financial management. For example, Blue Sky knows that the trend in the machine tool division is downward and within a couple of years that division will no longer be profitable. This is where they need a strategic plan in order to counter that trend, and hopefully get to the point where the division is sustainably profitable, and able to withstand the long-run trends.
Decision-making was typically autocratic in nature. The CEO made the big decisions, but then there were individual managers and executives who made decisions either about their divisions or their facilities. It appears that each manager had a fairly specific locus of control with respect to their decisions, but were always willing to defer to the CEO whenever he wanted to decide something. This form of decision making could be maintained by Willis, but he might not have the same in-depth expertise that Blue had, or he might prefer to do things differently. Either way, it appears that the process of decision-making is going to be less on gut feel, and less centralized at the CEO level, going forward. It does not appear that Willis has a specific vision for how he wants decision-making to look, however, and he will need not only to have such a vision but to communicate it to the rest of the company so that everybody understands how their role will change with respect to decision-making going forward.
Design and Control Problems
The organizational design is suboptimal at the company. There are three distinctly different business units, and they should be separated from one another. For example, Blue and James worked together to come up with a solution to the Machine Tools problem. Now, James is suggesting that the reverse that decision – but his idea has nothing to do with the problems that the division is facing. He has had too much autonomy, or at the most worked with Blue. Now, he is being asked to also work with Counts and Hubres and this is causing problems. Ultimately, this stems from James having a high degree of autonomy but without having accountability. Willis is seeking to introduce both accountability for decision-making and greater input from some of the other senior executives. So there’s definitely an organizational design issue there. Greater levels of organizational control can reduce the sorts of political issues that are occurring at the company (Kreutzer, Walter & Cardinal, 2014).
Further, some of the regional offices seemed to have some decision-making capabilities designated, probably based on what was convenient for Blue, whereas now Hubres is suggesting that some of that decision-making be centralized again.
Each of these issues stems from managers who did what was easiest, and had complete autonomy to do so. By making changes to the control function, Willis will put the organization in a position where he is making the types of decisions that a CEO should make. He wants there to be less autonomy, and more control, for example that each division head has to make decisions based on metrics and financial analysis, which is what Counts and Hubres are contributing.
Thus, one of the things that Willis needs to do here is make sure that the new organizational design and control functions are part of his vision. He needs to communicate to the senior executives this vision, and how their roles will change. He will need to listen to them, and in the case of one or two maybe be prepared to put a package together for them to retire out of the company. Ultimately, if there were issues in the short run it was because everybody was defending their established turf, including their way of doing things and how they made decisions. They do not necessarily trust Willis and certainly do not trust Hubres. If need be, Willis has to be prepared to bring Blue back into the conversation – as Chairman of the Board he is in a unique position to give Willis a further vote of confidence.
Conclusions
Willis is facing a period of organizational change. The first thing he needs to do is ensure that he outlines his plan to Blue, who is Chairman of the Board and therefore still highly influential with the other executives. If he lends his full support behind Willis’ plan, that will go a long way to quelling any issues. However, there are specific changes Willis needs to make in order to implement greater controls, maybe make shifts in the org design, and certainly to implement strategic planning, more input from the Hubres and Counts, and to decentralize some of the decision-making. Ultimately, Willis is going to need to adopt a transformational approach to leadership.
That said, he cannot expect that he will be able to do this immediately. He has to realize that the entire structure and culture is based around autocratic leadership, where each leader within the company has a specific locus of control. Willis, as CEO, will be somebody to whom people defer. Studies show that autocratic leadership can be effective in the short run, and certainly when driving change and minimizing conflict, this is something that will need to be utilized, if only to create enough stability for transformational leadership efforts to be implemented and start to bear fruit.


References

Iqbal, N., Anwar, S. & Haider, N. (2015) Effect of leadership style on employee performance. Arabian Journal of Business and Management Review. Vol. 5 (5) 145-151.

Karadag, H. (2015) Financial management challenges in small and medium-sized enterprises: A strategic management approach. Emerging Markets Journal. Vol. 5 (1) 26-40.

Khan, Z, Nawaz, A. & Khan, I. (2016) Leadership theories and styles: A literature review. Journal of Resources Development and Management. Vol. 16 (2016)

Kreutzer, M., Walter, J. & Cardinal, L. (2014) Organizational control as antidote to politics in pursuit of strategic objectives. Strategic Management Journal. Retrieved March 3, 2019 from https://www.researchgate.net/profile/Jorge_Walter/publication/263473862_Organizational_Control_As_Antidote_To_Politics_In_The_Pursuit_Of_Strategic_Initiatives/links/5a060b7e4585157013a39a9e/Organizational-Control-As-Antidote-To-Politics-In-The-Pursuit-Of-Strategic-Initiatives.pdf

Naile, I. & Selesho, J. (2014) The role of leadership in employee motivation. Mediterranean Journal of Social Sciences. Vol. 5 (3)

Zhu, Y. & Akhtar, S. (2014) How transformational leadership influences follower helping behavior: The role of trust and prosocial motivation. Journal of Organizational Behavior Vol. 35 (2014) 373-392.