Summary by David Montgomery
Master of Accountancy Program
University of South Florida, Summer 2003
The purpose of this article is to describe the necessary requirements that a new technical theory should contain if it is to provide a sound basis for managerial action. The authors accomplish this by describing the series of processes required to implement an innovative technical initiative beyond aligning the interests and incentives of participants. According to the authors, “If this process is successful: 1.) participants learn to understand the new ideas, 2.) participants believe that the ideas are valid and useful, and 3.) management encourages the implementation of the new ideas” (83).
Internal and External Validity of Theories
There are two types of tests that statements about action-oriented theories should pass:
Test1: The theory’s statements are tested by specifying what can or cannot be produced by people attempting to apply the theory. This is an internal consistency test, and in order to pass, the theory must be explicated logically and clearly.
Test 2: This set of tests relate to the theory’s external validity. In this test, the statements identify the actions to be taken in order to implement the new ideas and the expected consequences more effectively.
“In the initial stages of developing new technical theories, such as ABC, much effort is devoted to demonstrating their internal consistency and external validity . . . But these conditions are merely necessary, not sufficient for managerial acceptance” (85).
Process I: Education and Sponsorship
The initial process to introduce effectively a new technical approach, requires three distinct stages:
Stage 1 – Education: This stage involves learning and accepting the logic and validity of a new technical approach. This stage follows a logical sequence of three distinct steps:
Step One – Identify the gaps in existing theory and practice. Gaps can be identified by examining documents and opinions of critiques.
Step Two – Articulate a new theory that corrects the gaps. This is typically accomplished through management experience.
Step Three – Provide examples of how the new approach benefits organizations. Traditionally, managers have been surrounded by numerous emerging theories. Thus, they will be skeptical about implementing new theories, especially ones that contradict historical trends. The authors suggest setting up numerous well-attended seminars about the new theory and to have representative companies share their experiences with implementing the new theory.
Stage 2 – Sponsorship: This stage involves persuading key individuals and authoritative managers in the organization about the value of the proposed approach in their setting. This stage requires people to function in four distinct roles: advocacy, sponsorship, project support, and target. The advocate is the person who first became aware of the approach and attempts to launch the project. The sponsor is the person who approves the project. The project leader is the change agent. Meanwhile, the target is the person or group hose behavior and actions are expected to change based on the newly revealed information. Based on the authors’ study, most senior operating executives had sponsored the project and were actively involved in its early stages. They also mention action was taken early when the target was identified early in the process.
Stage 3 – Align Incentives: In this stage, it is critical to enable the change to occur in the organization. According to the authors, “Going beyond education and sponsorship, we see organizations providing systems or structures that facilitate, reward, and reinforce effective change” (89). This can include such things as reduced managerial layering, and financial and non-financial rewards for successful implementation. These organizational enablers attempt to provide information and incentives to encourage acceptance of the technical change.
External and Internal Commitment
Alignment of incentives does not come without limits, its limits can be traced to the distinction between external and internal commitment. External commitment is when individuals assign the causal reasons for their energy and attention primarily to variables other than themselves. Meanwhile, internal commitment is when the individuals assign the causal reasons for their energy and attention to themselves. According to the article, “Those with internal commitment will see themselves as personally responsible and as initiating behavior. In contrast, those with external commitment will tend to see themselves as acting in accordance with rules set by others” (91). The best implementations occur when individuals can create the conditions where their commitment is intrinsically satisfying and rewarding.
Dilemmas Created by the Education and Sponsorship Process
In nature, the education and sponsorship processes can create organizational problems. These problems tend to occur from unforeseen or unexpected circumstances. Thus, there is no plan of action in place to overcome them. Dilemmas can occur from lack of knowledge, groups failing to become business partners, organizational resistance, and from target group members being involved in the analysis project team as well. The authors warn that not seeking sponsorship early may condemn the project to irrelevance or subsequent organizational resistance. They also provide the following diagram to describe the initial process for implementing technical innovations:
Limitations of the Education and Sponsorship Process
The main limitation of the education and sponsoring process occurs because new technical innovations become highly embarrassing and/or threatening to certain participants by revealing that past and continuing organizational decisions and practices are either contradictory or erroneous. Therefore, managers will be less willing to implement the change if it threatens their self-image or could be a cause of embarrassment. According to the authors, “Extensive research has shown that managers facing embarrassment and threat from new information, or from a new theory of managerial action, will engage in defensive routines to deny the legitimacy of the analysis” (93). Managers will then use these defensive routines to inhibit the discovery of the underlying causes of the embarrassment.
Theories of Action: Espoused Theories and Theories-In-Use
Individuals have two kinds of theories of action: theories they espouse and theories they actually use. The values, beliefs, and attitudes individuals express when questioned is known as espoused theories. Whereas, theories-in-use contain the rules that individuals follow when they design and implement their actions. The authors examined the differences between the theories by performing a case method involving 36 financial managers. Participants were asked to identify a problem that they had sought to solve that was likely to be embarrassing or threatening. The participants were then asked to describe how they attempted to overcome the barriers they had identified. Some of their conclusions included the following: people carry on private conversations when they think the situation is embarrassing or threatening, people censor these conversations and then act as if they are not doing so, and people seem to use a pattern of reasoning that advises them to be rational, be positive, and to suppress negative feelings. The authors mention the executives were surprised that these features went contrary to the positions they espoused about themselves when dealing with human beings.
Model I Behavior
Model I behavior is consistent with manger thoughts and feelings. It contains four governing values: 1.) be in unilateral control, 2.) strive to win, 3.) suppress negative feelings, and 4.) strive to be rational. “Two of the most prominent action strategies emanating from Model I behavior are: (1) make evaluations and attributions that are likely to keep you in control and to win, and (2) to suppress negative feelings” (97). However, this model can lead to consequences such as escalating and self-reinforcing errors, as well as defensive routines.
Organizational Defensive Routines
As previously mentioned, Model I theory-in-use can lead directly to the development of defensive routines. Defensive routines make attributions about reality that indicate little interest in learning. They also indicate activities that no one wants, yet they persist. Finally, they indicate we-they relationships that are counterproductive. The main problem with defensive routines is they create self-sealing, self-fueling processes that hinder learning and problem solving.
Overcoming Model I Behavior: Learning Model II Reasoning
According to the authors, “We have found that the first step to overcome defensive routines is to help the participants become aware of the degree to which they use Model I reasoning and the degree to which they remain within the constraints of the organizational defenses” (99). Once this is accomplished, a new model of behavior, Model II, can be introduced. Model II behavior helps participants reduce unintended and adverse consequences. This model of behavior contains three governing values: 1.) produce valid information, 2.) encourage informed choice, and 3.) monitor vigilantly one’s actions to detect and correct errors. Some of the bright points of Model II behavior include a new level of respect among individuals, and it enables the undiscussable to be discussed and the unchangeable to be changed.
Process II: Create Internal Commitment
As with any new technical innovation, its success is initially contingent upon those involved on the inside. Individuals should always be encouraged to express their opinions, especially if they have any doubts about the new innovation. Reactions such as “you do not really understand; and climb aboard and give it a chance,” will not build an internal commitment in the doubting individual. The key to building internal commitment is to create change situations where data exists or can be created so that statements can be tested. According to the article, “Reasoning methods leading to Model II behavior will likely be required if resisting individuals are to become persuaded and internally committed to the merits of the new approach” (103).
Once confidence is gained about the theory’s internal consistency and external validity, the initial process requires three interdependent phases: education, sponsorship, and incentive alignment. Problems that can arise include organizational resistance and defensive behavior by individuals and groups who are exposed to embarrassment and threats. The authors suggested two reasons why discrepancies and self-limiting features have not been dealt with effectively. First, defensive routines become activated and by-passed. Second, individuals tend to be unaware of their own skilled incompetence when dealing with issues that are embarrassing and threatening. “The usual approach for dealing with organizational resistance and defensive behavior requires the participants to agree to engage in a complex learning process designed to create awareness of how their ‘theories-in-use’ conflict with their espoused theories” (103).
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