asoy pdf

MANAGING Understanding
in ORGANIZATIONS
Jorgen Sandberg and Axel Targama

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Managing Understanding
in Organizations

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Managing Understanding
in Organizations
Jörgen Sandberg
Axel Targama
SAGE Publications
●
●
London
Thousand Oaks
New Delhi

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© Jörgen Sandberg and Axel Targama 2007
First published 2007
Apart from any fair dealing for the purposes of research or
private study, or criticism or review, as permitted under
the Copyright, Designs and Patents Act, 1988, this publication
may be reproduced, stored or transmitted in any form, or
by any means, only with the prior permission in writing of
the publishers, or in the case of reprographic reproduction,
in accordance with the terms of licenses issued by the
Copyright Licensing Agency. Enquiries concerning
reproduction outside those terms should be sent to
the publishers.
SAGE Publications Ltd
1 Oliver’s Yard
55 City Road
London EC1Y 1SP
SAGE Publications Inc.
2455 Teller Road
Thousand Oaks, California 91320
SAGE Publications India Pvt Ltd
B-42, Panchsheel Enclave
Post Box 4109
New Delhi 110 017
British Library Cataloguing in Publication data
A catalogue record for this book is available
from the British Library
ISBN-10 1-4129-1065-X
ISBN-13 978-1-4129-1065-1
ISBN-10 1-4129-1066-8
ISBN-13 978-1-4129-1066-8 (pbk)
Library of Congress control number 2006921668
Typeset by C&M Digitals (P) Ltd, Chennai, India
Printed on paper from sustainable resources
Printed and bound in India by Gopsons Papers Ltd

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Contents
1
Understanding becomes a key issue
1
A paradigm shift is taking place in management
1
Socio-economic forces behind the paradigm shift
2
Research emphasizes understanding as the basis
of human action
10
The paradigm shift: from instruction to vision
11
How this book is organized
18
Summary
20
2
The rise of an interpretative perspective
on management
21
Management has been dominated by a
rationalistic perspective
21
The alternative: the interpretative perspective
26
What is the practical relevance of having one
perspective or the other?
31
A gradual shift of perspective in management research
33
Research paradigms control the content of knowledge
49
3
Human competence at work: a question
of understanding
51
Human competence: the basis for all enterprises
52
Rationalistic approaches to competence
54
Towards an interpretative approach to competence
58
A practical example: competence in engine optimization
62
Understanding: the basis for human competence at work
71
Concluding remarks
73

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MANAGING UNDERSTANDING IN ORGANIZATIONS
4
Understanding: the basis for competence development
75
Understanding as the basis for what competence
we develop at work
76
Understanding as the basis for how we develop
competence at work
78
How does understanding operate?
80
Reflection: a basic condition for developing competence
86
5
Shared understanding: the basis for collective
competence and its development
89
Collective versus individual competence
89
The social nature of understanding
91
Shared understanding of flute manufacturing
94
Collective competence as culture
97
Developing collective competence by changing
shared understanding
104
6
Understanding and its transformation
109
Once again – what is understanding?
109
Issues involved in transforming understanding
112
Concluding remarks
123
7
Methods and principles for managing understanding
125
Possible methods for managing understanding
125
Language-driven methods
126
Action-driven methods
139
Guiding principles for managing understanding
154
Concluding remark
158
8
Management: a question of managing understanding
159
Shift in focus and new priorities in management practice
160
The paradigm shift reshapes the point of leadership
170
Avoiding the rationalistic trap
180
Some problematic power issues in
managing understanding
188
Conclusion
191
References
193
Index
205
vi

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ONE Understanding becomes a key issue
A paradigm shift is taking place in management
During the last two decades, we have witnessed a substantial shift within
both management practice and academic discussions concerning how human
action can be managed effectively in an acceptable way. Some writers, like
Beckérus et al. (1988), have described it as a doctrinal shift while other schol-
ars, such as Clark and Clegg (2000) and Pearce and Conger (2003), have
portrayed it as a paradigm shift in management. The central message is that
a shift is taking place in management from using direct techniques, such as
specific rules and instructions, to the development and use of more indirect
techniques, such as vision, mission, culture and values, together with a lead-
ership based more on dialogue rather than authority for managing human
action. There are two main reasons for this shift.
The first is that since 1980 society has undergone a range of social and
economic changes, such as rapid technological development, increasingly
knowledge-intensive industry and intensified global competition. These
changes have given rise to new organizational forms, where the degree of free-
dom has increased at every level and individuals have received more indepen-
dence at work. A key consequence of employees’ greater autonomy is that
management has lost its direct control over their behaviour. Managers must, to
a much larger extent than previously, trust that their staff act and make judge-
ments in accordance with the company’s strategic direction. To maintain some
control over employees’ work performance, managers have become more
dependent on being able to influence people’s understanding of their own and
their companies’ task. The increased need to manage understanding has led to
the development and use of more indirect management techniques (vision,
values, culture, etc.) and a more dialogue-based leadership.
A second reason for the paradigm shift is that management by ideas
and visions have received strong support from more recent research. During

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MANAGING UNDERSTANDING IN ORGANIZATIONS
the last thirty years, a growing body of interpretative research shows that
understanding of work forms the basis for human action in organizations.
The findings demonstrate that people’s work performance is not primarily
influenced by external conditions such as specific rules and instructions
per se. Instead, work performance is first and foremost defined by people’s
understanding of their work and how they understand the rules and instruc-
tions imposed upon them. This insight suggests that in order to create effec-
tive work performance managers need to develop and maintain a shared
understanding among the employees about the company‘s task. Formulating
the company’s task in a set of central ideas and values that the employees can
themselves commit to has thus become a chief managerial task.
The difficult art of ‘understanding understanding’
Even if managers realize that the way people understand their work is funda-
mental to their performance, most companies still have difficulty influencing
the way employees accomplish their work. Why? A central argument in this
book is that the paradigm shift has only taken place at a rhetorical, but not at a
practical, level. Managers have not been able to implement the change in prac-
tice because they have tried to do so by following the traditional leadership
principles within the rationalistic management tradition. By following the ratio-
nalistic principles, they are unable to understand how employees’ understand-
ing of their own and their company’s task forms the basis for their work
performance and, thus, how understanding can be managed more effectively.
A capacity to influence understanding presupposes knowledge of how
understanding operates. In this book, we propose an interpretative manage-
ment perspective as an alternative to the prevalent rationalistic perspective
on management. This shift in perspective makes it possible to ‘understand
understanding’ and, thus, to develop practical ways of managing under-
standing that can enhance work performance in organizations.
Socio-economic forces behind the paradigm shift
To manage employees so as to achieve a competitive advantage, managers
need to know what to influence and how to influence. Throughout the twen-
tieth century, a rationalistic perspective has characterized management
research and management practice. In such a perspective, the top-down principle
has been the dominant principle. To influence employees’ work performance,
managers plan the work to be performed and how it is to be performed. With
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UNDERSTANDING BECOMES A KEY ISSUE
support from administrative specialists, managers formulate specific rules
and instructions about work, which they impose on their staff through a hier-
archy of authority and responsibilities. Two main managerial strategies can
be distinguished: one emphasizing the process and the other emphasizing the
outcome of employees’ work performance. When focusing on the process,
managers try to influence employees’ work performance by imposing detailed
instructions and rules about how staff should accomplish their work (the
bureaucratic and the technocratic principles, respectively). When emphasizing
outcome, managers specify details about the outcome of the work assigned
to employees (management by objectives). The latter is, however, usually
combined with a considerable amount of instructions and rules concerning
work processes.
During the last two decades the dominant rationalistic management per-
spective has been heavily criticized as being inadequate for the effective
management of people’s work performance. One main reason derives from
the socio-economic changes taking place in society today, such as rapid tech-
nological change, more knowledge- and service-based industry, intensified
global competition, a more diverse workforce, an increased compression of
time and space, and shifts in values.
Technological changes
Over the past three decades, we have witnessed an increasing rate of techno-
logical innovation in areas like biotechnology, microelectronics and telecommu-
nications. The most profound technological advance is the development of
information technologies such as the computer and the internet. The computer
and, subsequently, the internet are themselves crucial vehicles in this techno-
logical development (Castells, 1996). Moreover, many of the new technologies
are applicable to almost all aspects of the world economy. For example,
computers and the internet have had an immense impact on national and inter-
national financial systems, creating radically new conditions for creating and
producing goods and services in many industries. Flexibility in terms of prod-
ucts and the production process has increased dramatically, while the life cycles
of both products and production process have been substantially reduced.
Taken together, such technological changes have created new requirements for
managing people’s work performance. In particular, to a much larger extent
than previously, managers are now required to facilitate an ongoing develop-
ment and renewal of staff competence as demand for new and varying compe-
tence at work arises. As Ellström (1992) argued, a difficulty employees often
encounter when confronted with new technology is not learning to use it, but
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