The Morgan Motor Company (MMC) is a British motor vehicle enterprise founded in 1910 by Henry Frederick Stanley Morgan. The source of competitive advantage for Morgan is to uphold two core deliverables cars that are affordable and cars that are made by hand. The video case study “Troubleshooter: Morgan Car Company – 1990” shows a snapshot of the business in 1990. At this time, the production of motor vehicles was far surpassed by demand and had led to an 11year waiting list on orders. Production was fixed at nine cars per week and had been this way for decades, meaning sales had stagnated at around 470 cars per year.
lOMoARcPSD|10803158 Introduction The Morgan Motor Company (MMC) is a British motor vehicle enterprise founded in 1910 by Henry Frederick Stanley Morgan The source of competitive advantage for Morgan is to uphold two core deliverables - cars that are affordable and cars that are made by hand The video case study “Troubleshooter: Morgan Car Company – 1990” shows a snapshot of the business in 1990 At this time, the production of motor vehicles was far surpassed by demand and had led to an 11-year waiting list on orders Production was fixed at nine cars per week and had been this way for decades, meaning sales had stagnated at around 470 cars per year Peter Morgan (chairman of MMC) and his son Charles Morgan had several issues to address regarding the company’s low production rate One of these issues was that they preferred to look at structural inefficiencies rather than at their leadership mindset and scope As Sir John Harvey Jones stated in the case study, “If you are not progressing, then you are regressing” Three key problems experienced at the company will be discussed in this essay The essay will focus on appropriate change strategies to implement for each problem, with recommendations specific to each case The three problems identified within the MMC are i) lack of urgency in business scope; ii) conservative culture, and iii) outdated, inefficient production ‘In the post-modern era, chaos and order are equally present as change is constant and continuously relevant (Berquist, 1993).’ Culture Effective cultural change starts with active input and engagement of the CEO and relevant executives (Thies and Nadler, 2001) Ideally, this cultural change filters through the business to the rest of the workforce Ingrained into the MMC’s staff values is a notion of slow change Hand building cars was the only available practice when MMC was founded in 1910 and since then little to the structure lOMoARcPSD|10803158 of the business has changed, including the culture If it is agreed that cultural change is desirable, assigning only senior management with the task of implementing cultural change may give rise to many sub-cultures among units, creating cultural clashes (Cartwright and Cooper, 1993) In the case of MMC, the possibly excessive focus on hand made cars appears to be the source of many problems which arise elsewhere in the business, especially in the area of investment Continuing to build cars by hand meant there had been very little capital expenditure in the company since 1910 - which explained why investing in superior power tools seemed so daunting for company leaders The incremental goal of increasing output from nine to ten cars per week demonstrated the fear of radical change, but also showed that the company acknowledged that output needed to increase It was notable that the workers too had developed a culture to resist change, as many employees had been with the company for most of their working lives and were content with what they knew It has been proposed that leaders must firstly possess powerful persuasive characteristics and secondly use these characteristics to promote their vision in order to encourage change (Bass, 1985) In the video case study, workers freely argued with Charles Morgan when he spoke of change, as though defending business norms were higher priority than listening and respecting authority The defensive stance taken by MMC workers may have come from two sources Firstly, there was a general fear of change, as workers believed they may not have had the skills or efficiency to handle changes to the output process Secondly, there was an acquired culture of stubbornness, laziness and resistance which valued conservatism and stability over change – even if the change was beneficial The Positive Model Considering the negative anti-change culture established in the MMC, the Positive Model may be appropriate for developing a mutually shared vision among all faculty which would counter the current undesirable mindset Initiating change within an organisation and developing follower acceptance is an intimidating task for leaders (Michaela and Burke, 2000) The Positive Model focuses on what is working, rather than what isn’t working The model uses Appreciative Inquiry (AI) to shift the perspective of recipients who are against change, rather than using models and theories to conduct change The fundamental focus on lOMoARcPSD|10803158 the strengths of human resources, and the many opportunities that can stem from these, are the basis on which AI can be used to establish a highly motivated workforce with an acceptance to change culture The Positive Model is a 5-step process starting with making an inquiry, where employees choose the problem which they have mutually agreed upon, to be improved Secondly, as a group, participants decipher their own best practices to find what works and why it works Thirdly, a theme of common principles found in the list of best practices is chosen Next, using the theme discovered, the group envisions a preferred future to which they will move towards as they divert from the standard practice Finally, a design of plans and actions to build the intended future is formulated and implemented The Positive Model is appropriate in this case as the change is incremental – small continuous changes are less likely to threaten a conservative culture - and leads toward a shared goal developed by the workers The Positive Model can promote camaraderie and team building if the change implemented by the model is successful As internal relations between employees improve, it can be predicted that overall positivity in business culture will follow The model is also appropriate for higher level managers and leaders as they can use statistics and data to inquire into best practices and implement strategies accordingly The third-party perspective of a manager or leader who isn’t constantly on the factory floor will also improve the depth and breadth of problems addressed using this model Recommendation Using Positive Model A recommendation to the Morgan Motor Company would be to form groups of employees who work as a unit For example, all the labour done to the chassis of the cars would be one group, the interior makers and installers would be another group, and so on Each small group would then carry out the processes of the Positive Model As a result, the company may experience a series of small changes which would have little or no negative effect on other groups, but improve overall production It has been shown that influencing the internal working environment with small changes to processes and culture can positively affect workers’ attitudes towards change and motivation (Amabile, 1998) As the successes of change are shown to the workers and other high-level faculty, the fear of change should slowly dissipate as more and more micro changes are undergone Continuing to undergo the Positive Model process in bigger and more diverse groups will provide greater transformation, which can then be attributed to the planning and actions developed by the lOMoARcPSD|10803158 workers - who are in this case the initiators and recipients of change The beneficial flow-on effect of change could contribute to shifting the mindset of the company’s leaders - possibly enough to invest inwards and increase output The goals of using the Positive Model are to slowly remove the conservative barriers written into the organisational culture and to develop a culture which is more amenable to change Business Scope The Morgan Motor Company was run in such a way as to remain true to its humble roots rather than satisfy customers, make profits, and grow The direction of business was focused on the past that even the slightest change to any processes provoked fear variation is detrimental to the product and therefore the business Relinquishing past values that are not relevant in a current state of business is a skill managers must encourage in their workforce (Whitely, 1995) The hand-made cars MMC produced were done so at fixed material and labour prices A limited array of cars meant inputs were similar for each car, while capital was fixed, with no plans to expand production significantly in the foreseeable future As outlined earlier, sales had stagnated at approximately 470 cars per year, limited by the lack of growth in production Speculators were profiting from the resale of orders in the waiting list – characterised by Charles Morgan as the ‘wrong’ customer to own a Morgan car Speculation, coupled with a large waiting list, signalled that there was justification to increase prices However, true to their core values, the management of the MMC held prices constant With profit at a fixed level, the slow but undeniable rise in inflation and wages would eventually suffocate the company If the MMC was to survive, there would need to be drastic organisational change Lewin’s 3-Phase Model Lewin’s 3-Phase Model is an appropriate model to apply to the issues of MMC’s business scope Lewin’s theory suggests that a status quo is achieved by the combination of restraining forces preventing change and driving forces pushing for change resulting in equilibrium The three phases of the model are ‘unfreezing’, ‘movement’ and ‘refreezing’ (Lewin, 1947) In the unfreezing stage, business momentum is slowed and barriers preventing change are lowered The movement stage is where change happens, affecting both physical structures and psychological factors Refreezing is consolidating the changes and maintaining the newly achieved status quo through reinforcing methods Strong, committed leadership before lOMoARcPSD|10803158 entering each phase of the model is key in controlling the outcome (Whelanberry, Gordan and Hinings, 2003) Relating this theory to the business case, Lewin’s model could be used to redirect the business scope towards a higher profit, with the MMC emerging as a more urgent and competitive company as a result In the unfreezing stage, leaders and managers at MMC can firstly understand for themselves the necessity of change Investigating an acceptable higher price for Morgan cars, and prospective customer demand at this price, should clearly identify a target market size and demographic which the business can then cater towards In the movement phase, the initially confusing and problematic new business direction can be introduced to the recipients of change, i.e., the lower level managers and workers Justification for the desired change and describing a clear pathway to achieve this is paramount in minimising resistance to change Finally, refreezing the newly defined scope of the business is key to prevent deviation from any planned change Consolidating information with workers starts with leadership showing a level of confidence in any agreed-upon change If leaders and high-level managers question or undermine a change, cynicism among workers will follow, leading to restricted productivity and reversal of the actions undertaken in the movement phase Recommendation Using Lewin’s 3-Phase Model A specific recommendation to the MMC would be to practically determine the demand for their cars There are many ways to source this information, including analysing previous sales records; comparing the company’s product with similar (interchangeable) products; and conducting public surveys Given that the price of semi-luxury sport cars is highly elastic, there would be an expectation that, as the price increases, demand will decrease In the case of the MMC, a large waiting list provides an invaluable opportunity to survey customers for pricing information The survey may require contacting customers through mail and asking questions such as “Would you purchase the Morgan 4/4 vehicle at ‘X’ dollars?” or “What you think is an acceptable price for the Morgan 4/4?” Collating data from this sample should indicate that there is room to increase prices, as shown from the speculative selling of orders Empirical evidence proving the opportunity to increase prices will redirect the business focus towards maximising profits, which will improve all other aspects of the business scope Production lOMoARcPSD|10803158 Insufficient output is the most obvious problem facing the MMC Most production issues seem to be the result of problems shown in the business scope and culture identified earlier However, there are root problems in production which inhibit success in the company The greatest problem within the production line is the slow pace of manufacture, leading to order delays There are two reasons which account for sluggish production - one being the use of inherently outdated infrastructure which ranges from no computer systems, to use of the most basic hand tools This lack of capital however is a symptom of both the weak business scope and conservatism The other source of inefficient output is a labour issue The low-level employees working on the factory floor were originally either apprentices at the MMC who had been hired upon completing their apprenticeship, or labourers who had been working at the company for an extended period The video case also stated that training a Morgan worker can take up to four years, as the skills and knowledge required for building cars by hand is extensive and precise The practice of retaining apprentices and holding onto staff allowed very little inflow of outside perspectives, skills and knowledge Existing employees didn’t push for better capital because they didn’t know any better - they knew only the tools and methods they’d been taught Processes that encourage radical departure from the organisational norms tend to fail because support and understanding of new initiatives is limited by the working members’ cognitive functions (Reger et al, 1994) Action Research Model The issue of narrow labour skills and knowledge could be negated using the Action Research Model The model is an iterative process which shows planned change as a cyclical procedure with multiple feedback loops and lots of information gathering The general flow of steps in the model are: Identifying the problem Consulting with relevant professionals Gathering data Receiving feedback from data Diagnosing Planning what actions to take Action Gathering data from the action lOMoARcPSD|10803158 Returning to step and repeating The core step in the model is feedback, which will show what and how many improvements can be made after each cycle until the problem is solved, or until procedures have reached a satisfactory level of success The Action Research Model can be used collaboratively to undergo incremental adjustments, which makes it appropriate to tackle issues involving labour Change isn’t necessarily linear or rational Pairing this with management of human resources requires small and thoroughly researched increments Use of the model is the key to maintaining stability while undergoing many repetitions of the process In time, this should lead to a significant macro transformation of labour skills and knowledge Recommendation Using the Action Research Model The Morgan Motor Company could use the Action Research Model to identify the lack of diversity in skills, knowledge and perspective as a problem and introduce new labour into the workforce Adding and removing workers slowly will reduce the strain on the business in the short run, while in the long run a greater proportion of innovative workers will be established within the company Ongoing gathering of data, receiving of feedback, and planning and acting on that feedback, will help ensure stability and progress within the business The end goal of this process is to have a workforce experienced in using power tools - one which is willing and motivated to implement changes to the manufacturing process, and which can share this vision with existing employees As pressure for greater capital bears down on leaders, the opportunity to increase output will coincide with the requirements of the workforce, thereby helping to resolve the issue of slow production Conclusion To relieve the symptoms of low output and low profit, the Morgan Motor Company needs to address three problems identified in their business Undergoing a positive change in the culture, away from conservatism and towards increasing investment on capital is necessary if they are to increase output The Positive Model can be used to create a shared vision among the workers promoting a healthier, pro-change work culture They must also redirect the business scope, achievable through the actions described in Lewin’s 3-Phase Model Finally, altering the composition of workers with an increase in the number of employees sourced from outside the company will boost demand for better capital and provide a greater variety lOMoARcPSD|10803158 of insights and perspectives Slowly increasing new labour using the Action Research Model to guide the process will increase output radically in the long run References Amabile, T.M (1998) How to kill creativity, Harvard Business review, 76(5), pp 76-87 Bass, B M (1985) Leadership and performance beyond expectations Free press, New York Berquist.W (1993) The Post-Modern Organization: Mastering the art of irreversible change Josey Bass, San Francisco Cartwright, S Cooper, C.L (1996) Managing mergers, acquisitions and strategic alliances: Integrating people and cultures Butterworth-Heinemann, Oxford K.S Whelan-Berry, J.R Gordon, C.R Hinings (2003) Strengthening organizational change processes: Recommendations and implications from a multi-level analysis Journal of Applied Behavioral Science, 39 (2003), pp 186-207 Lewin, K Field theory in social science: Understanding the stages of change Oxford, England: Harpers (1947) Michaela, J.L and W.W Burke (2000) Organizational culture and climate in transformations for quality and innovation, Handbook of organizational culture and climate pp 117-129 Nadler, P.A Thies, P.K Nadler, M.B (2001) Culture change in the strategic enterprise: Lessons from the field The international handbook of organisational culture and climate John Wiley & Sons Ltd, Chichester Reger, R.K et al (1994) Reframing the organisation: Why implementing total quality is easier said than done, Academy of Management Review, 19(3), pp.565-584 Whitely, A.M (1995) Managing Change: A core values approach Macmillan Edition, Melbourne