Organizational development and resistance to change at Space Electronics Corporation

Organizational Development: The Space Electronics Corporation Case Study

Review of Subject
Q1: Summary of Current Situation
Profitability and market share have both suffered recently for Space Electronics Corporation, a subsidiary of a $300 million firm. Although Space Electronics continues to hold key contracts both commercially and in the military sector, innovation has floundered. The only two upcoming projects include a new electronic guidance system for the stealth bomber and electronic control systems for a remote-controlled military airplane. While it seems feasible to pursue these two upcoming projects, senior management has hesitated. Reasons for the hesitation include the need for structural change: the new projects would make Space Electronics the primary contractor, whereas in the past, Space Electronics functioned as a subcontractor. The new projects effectively changes roles, relationships, functions, and systems within the Space Electronics organization.
Q2. Problems and Role Assessment
Problems include those related to leadership and communications, as well as organizational culture and structure. The President of Space Electronics is Reade Exton, and the Vice President is Glen Overton. Other senior managers and executives include Vice President of Finance Oliver Whittier, Vice President of Marketing Ted Byron, Vice President of Industrial Relations Paul Brown, and Vice President of Manufacturing Mort Jenson. Diversity is sorely lacking in Space Electronics, which may be a factor impeding progress and change. Even though corporate headquarters has been pressuring Space Electronics to embrace the new projects, the organization has resisted based on resistance to or fear of change. For example, Whittier notes that embarking on the new projects would mean “a major departure from our past policies.” Rather than use creative thinking to work with corporate headquarters on funds allocation, Whittier and other members of senior management focus on rough risk analyses based on intuition rather than on actual metrics. The problems do differ only slightly based on the individual roles of the managers, with all voicing concerns that could more easily be resolved using creative thinking, collaboration, and restructuring. Byron is the only optimistic and progressive member of the senior management team, focusing on the “personal contacts in Washington” that can propel the projects and lead to successful outcomes.
Q3. Challenges to Accomplishing Objectives
Many of the members of the executive team do raise legitimate concerns. One of the challenges to accomplishing Space Electronics objectives is cost. The organization does need to consider new means of allocating funds to the project, raising new capital or cutting costs. Also, the venture is risky. Brown raises the importance of employee relations. The means by which Space Electronics can meet this challenge is by increasing employee engagement. It is likely that current employees are not engaged, having stagnated in an old business model and an organizational culture that is static and resistant to change.
Q4. Analysis Using Organizational Development Theories and Concepts
Organizational culture and climate are key issues impeding the development of Space Electronics. Action research and change management are other key issues in this case. The organizational culture and climate issues at stake include a disconnection between Space Electronics vision and that of the parent company urging the organization to take more risks with the new projects. Moreover, the lack of diversity within Space Electronics senior management may be impeding creative thinking and innovation, which could lead to new ways of cost structuring and budgeting for the proposed projects. Change management is also one of the problems with Space Electronics, with few of the leaders being willing to take risks and most exhibiting resistance to change.
Discussions
Resistance to Change
One of the ways of addressing this issue is via change management models, focusing on how to remove resitance to change. Research refers to points of tension, dualism, duality, and contradictions that inhibit creativity in the organization and prevent constructive means of stimulating change and innovation. For example, Putnam, Fairhurst & Banghart (2016) offer a comprehensive literature review covering organizational development contingencies related to “push-pull dilemmas,” like those evident in the Space Electronics case with a few members like Byron pushing for risk and change, while other members of senior management serve as the binary opposite of conservative resistance (p. 5). While the literature remains “fragmented” on providing consensus on what factors best drive organizational change, change management models like action research and Kurt Lewin’s three-phase process can offer Space Electronics valuable insight into how to balance the concerns voiced by change resisters with the motivation to take risks as voiced by corporate headquarters (Stouten, Rousseau & De Cremer, 2018, p. 753).
The enterprise risk management (ERM) approach offers a more comprehensive means of approaching resistance to change, looking at both external and internal forces to identify main issues and addressing each one independently (Zhao, Hwang & Pheng Low, 2014). One of the most ironic issues in this case is the attitude exhibited by Vice President of Finance Whittier, who recognizes the external and internal drivers motivating change—such as losses and reduced market position. In spite of being faced with clear financial indicators, Whittier remains uncertain that the new projects will be feasible from a financial perspective—a phenomenon discussed in the literature on performance shortfalls and slack resources (Kuusela, Keil & Maula, 2016). As Kuusela, Keil & Maula (2016) found, organizational change can be stimulated via a “resource freeing” approach, liberating Whittier and his like-minded colleagues from narrow thinking related to resource consumption and outmoded processes (p. 1101).
A process-oriented approach may also help the members of the senior management team to use collaborative methods of working out a way to assess risk and manage change, while also stimulating innovation through the empowerment of employees (Waisbord, 2018). When evidence-based models of organizational development are applied to incremental change models, Space Electronics can recognize its role and potential in regaining market share and improving profitability.
Organizational Culture and Climate
Another way of approaching the issue is via organizational culture and climate, as well as leadership styles. Organizational culture and climate are major issues preventing Space Electronics from reaching its potential. The organizational climate has enabled complacency, resulting in the stagnation that resulted in loss of market share and lower profits for Space Electronics. Yet all is not lost for the firm, which now has the opportunity to embark on two lucrative new projects that could help Space Electronics regain traction in the industry and especially within the military sector. It might require the company to shift its focus from commercial enterprises to the military market, which would entail wholesale organizational climate and culture change. Space Electronics needs “a clear vision” for the future (Zhao, Hwang & Pheng Low, 2014, p. 821). To develop and communicate this clear vision, corporate headquarters needs to partner with change leaders like Byron to stimulate organizational culture change. This may require the empowerment of department heads to provide insight into how employees might participate in driving change through product innovation, as many engineers may offer ideas about how to cut costs or reduce waste. Creating an organizational culture that is headed by transformational leaders would be crucial in creating the climate necessary to successfully envision a strategy for the two new product contracts.
Conclusions
Space Electronics faces internal and external drivers of change. External drivers include the push for new technologies: for if Space Electronics turns down the two projects another firm will most certainly pick up the slack. With Space Electronics already having lost market position, it is actually riskier to turn down the projects than it is to fulfill them. Other external drivers of change include the pressures from competitors, and the pressure also from corporate headquarters pushing Space Electronics leaders for innovation. Internal forces driving change in Space Electronics include culture and climate, the need for improved profitability and better resource management, and possibly altering the structure of the organization to focus more on military contracts.
Currently, Space Electronics leaders are divided on what direction to take. None of the senior managers except for Byron seem to realize the severity of the situation Space Electronics faces. If no change is taken and the company does not take on these projects, it will stand to lose far more than it would if it retained the status quo. Those concerned about employee layoffs need only to shift their thinking to embrace a new direction that focuses on transformational leadership that empowers members of the research and development teams to contribute knowledge about how to better allocate resources, cutting costs and liberating funds to fulfill the promising new contracts. Both a change management and an organizational climate approach can help Space Electronics overcome resistance to change, but it will require strong visionary and transformational leadership to help steer the firm in the right direction.

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