12
Members were asked to complete two questionnaires, one indicating what they
perceived to be the firm’s actual current culture, the other their preferred ideal
culture. Scores were plotted for each style (see case Exhibits 4 and 5), with the
highest score representing the organization’s primary or dominant cultural style, and
the second highest the secondary style.
Exhibit 4 in the case indicates the degree of gap between the perceived actual and
ideal cultures. The wider the gap, the more Terra Nova fails to match employees’
notion of an ideal culture. Negative gaps indicate less than desired levels with respect
to matching the ideal culture (lack of affiliative culture), whereas positive gaps
Case Exhibit 5 indicates the degree of consistency in members’ responses. Low
standard deviations or “strong” intensity indicate strong agreement between members
as to whether Terra Nova performs well on this dimension. This should be interpreted
IM EXHIBIT 3: COMPARISON OF TERRA NOVA’S CULTURE
Style
Prior
Today
Constructive
Humanistic/Encouraging
Affiliative
Achievement
Self–Actualizing
Very Strong
Strong
Very Strong
Very Strong
Weak
Weak
Medium
Weak
Passive/Defensive
Approval
Conventional
Aggressive/Defensive
Very Weak
Very Weak
Weak
Medium
2. What are the barriers to change?
a) The lack of negative financial performance. Revenues are increasing, reducing urgency to
change (though profitability is declining).
b) Senior partners are happy and think things are fine.
c) O’Reilly has lost credibility with the partners by focusing on rebranding without building
advance support for his ideas.
Students could be requested to use Lewin’s force field analysis to identify and gauge the level of
opposition and support for change within Terra Nova, and which parties need to be influenced to
effect change. Some of the factors/parties are identified below.
a) Kotter (1996) states that the first step for change involves creating a sense of urgency,
typically through some form of crisis. As noted above, although profitability is declining, the
company is not in significant financial difficulty yet. However, there are negative trends in
b) According to the OCI results, the partners are happy with the current state of Terra Nova.
Their perceptions of the actual and ideal cultures are aligned, so from their perspective, there
is no crisis/problem. However, internal “gossip” (see Jindal’s comment) about OCI’s
14
c) Terry has lost a certain amount of political capital amongst the partners by his lack of
attention to the cultural and political dimensions at Terra Nova (changes to logo and slogan).
As indicated at the beginning of the case, and reinforced by Doug Hunter and Matt Ferguson
later, Terry did not follow the tacit decision making process for major decisions by involving
the partners.
3. What alternatives does O’Reilly face?
a) Adopt a more formal organizational structure and increase management control through
explicit rules, policies, and procedures.
b) Attempt to rebuild the former collegial culture by building renewed commitment to their
stated core values.
Terry may be facing an inflection point at Terra Nova. He can either choose to make Terra Nova a
more formally managed company by introducing additional structure, hierarchy, and control, or he
can seek to rekindle the sense of community and mutual adjustment. Theoretically, these options are
described by Cooper, Hinings, Greenwood, and Brown (1996) as the Managerial Professional
Business (MPB), or the Professional Partnership (P2) forms. The MPB introduces business
management principles and bureaucracy to govern the firm, including formal hierarchy, rules and
15
a) Adopt a more structured environment including specifying formal roles, responsibilities and
reporting relationships, and codifying company policies and procedures. This would involve
evolving towards the MPB form. As noted by Chris Barker, some of the junior professionals
appreciated the higher level of structure in the Toronto office (reflective of the MPB), which
included a clearer sense of career path/progression. Several issues should be considered as
part of adopting the MPB form:
• Should Terra Nova develop a formal organization chart, clearly outlining the roles,
responsibilities and qualifications of partners, project managers, senior and junior
professionals? Up until now, firm managers have not seen the need for clear definition of
roles and responsibilities, in part as this allowed flexibility in terms of work arrangements
and assignments.
b) Attempt to rebuild the former collegial environment based upon professional codes of
conduct and mutual adjustment. This will include getting all members to buy into the firm’s
stated core values (see case Exhibit 1).
Professional service firms following the P2 form are more likely to feature clan cultures.
Professionals in general are more likely to be internally motivated (Theory Y), goal oriented
(i.e., self–actualization), and guided by internalized values and codes of conduct. Relying
upon internalized codes of conduct to ensure appropriate individual behavior consistent with
16
the past this was facilitated through informal mentoring relationships between Terra
Nova partners and new junior professionals. Does Terra Nova want to revive this practice
(requiring cooperation and commitment by partners), or attempt to institute more formal
programs (e.g., employee orientation sessions)?
• Convince new employees of the value of Terra Nova’s employee ownership model. A
key value among the partners and long tenure employees of Terra Nova is the importance
of employee ownership and individual investment. Individual investment is important as
it is linked to trust (i.e., we can trust you to do the right thing as your fortunes are tied to
those of the firm), and compensates for the absence of direct controls.
• Promote and support individual initiative and personal development. Younger
professionals at Terra Nova seemed discouraged by a perceived lack of opportunities or
Although the following do not need to be addressed as part of solving the case, related issues
include:
• An appropriate balance between formal structure and individual autonomy. Professional
workers value autonomy in how they perform their activities (Robertson and Swan, 2003)
and are less likely to accept micromanagement and bureaucratic rules.
• Each profession at Terra Nova may have slightly different norms and values. As Terra
Nova employs an increasing diversity of professionals, it may need to promote shared
organizational values, norms, and goals to avoid competing values.
17
4. How should O’Reilly go about making desired changes?
a) First, O’Reilly has to decide the key changes that must be made.
b) Second, he has to convince the key partners that change is needed. This would entail a
detailed plan of approaching each partner, and having Doug and Matt work on their
networks to sell change.
c) Third, once he gets two–thirds of the partners onboard, he can try to roll the plan out to the
firm. If he cannot get certain partners to support his plan, he needs to ensure that they do
not actively oppose it.
a) The key changes O’Reilly needs to make will depend upon whether students believe that
Terra Nova should become a more structured company, or attempt to rebuild its former clan
culture. Several of the needed changes will fall out from that decision, and have been outlined
above.
b) Bridging the cultural divide at Terra Nova will be challenging given the size of the gap
between junior and senior professionals as indicated by the OCI study. One way to attempt to
build senior partner support will involve linking these actions to some of Terra Nova’s
“historical” approaches:
• In the past, many Terra Nova partners took new staff under their wing as informal
mentors. This facilitated Terra Nova’s partner system, which required sponsorship of
candidates by existing partners. Instituting a formal mentoring system (while encouraging
informal mentoring), will help open lines of communication.
c) Recognizing that Terry is unlikely to get all of the partners onboard through appealing to a
nostalgic view of Terra Nova, there are some additional actions he could take:
• Get the partners to discuss possible “sanctions” for “unacceptable behaviors” (by both
junior and senior professionals). As noted by Collins (2001), create a “stop–doing” list of
harmful activities in addition to a “to–do” list.
• Provide additional training and development sessions (e.g., cultural diversity, sensitivity
training), and make changes to Terra Nova’s project leadership (greater opportunities for
junior professionals).
18
Action Plan for Change (Cawsey, et al., 2012)
Students could be directed to follow Cawsey, et al.’s action plan (Ch. 9) to outline practical steps needed
to implement change at Terra Nova. Among the actions required are:
• Developing senior management awareness and support.
• Basing change upon an understanding of how the organization works and what tactics are more likely
to be successful.
• Determining whether suitable or novel solutions are required, and whether change may involve trial
and error.
Building upon this analysis, students would then flesh out the following:
1. To–do list: What specific actions need to be taken as part of attempting change at Terra Nova? This
may include group discussions between junior and senior professionals, increased mentoring to foster
ties between the two levels, and/or team building activities. Additional changes may involve
increasing junior professional salaries to at least the industry average, providing additional
opportunities for international projects and/or developmental assignments, and developing additional
training sessions that help introduce junior professionals to the consulting industry and socialize them
to Terra Nova’s culture.
19
3. Contingency planning: This may be less important under the circumstances than scenario planning.
Although there may be an element of trial and error concerning change initiatives, flexibility in terms of
being prepared to adopt or discard certain actions may be more important. Terra Nova senior management
should identify alternative courses of action in the event particular initiatives prove less than effective.
4. Surveys and feedback: Employee surveys will be important for tracking whether change is
occurring, and in the direction hoped for. In this situation, employee attitudes and perceptions about
the firm and its culture will be key. The guidelines of the OCI can be used as the basis for subsequent
in–house surveys, or OCI Consulting can be contracted for follow–up surveys (may be expensive).
7. Leverage analysis: Actions that may build leverage among the Terra Nova partners include: formal
policy against selling out/going public, commitment to remaining an elite firm, vetting future change
proposals through the board. With respect to junior professionals, opening lines of communication,
pay increases, and greater attention to work–life balance may help.
EPILOGUE
Terra Nova survived this organizational crisis and proceeded to become recognized as a top employer by the
business press (based upon an annual survey of employee engagement). Since the crisis, the firm has grown
in terms of its sales, staff size, and has returned to double-digit profitability. However, this change was not
easily achieved, and took several years to effect. More importantly, Terry O’Reilly did not survive as
20
REFERENCES
Amis, J., Slack, T., and Hinings, C. R. (2004). “The Pace, Sequence and Linearity of Radical Change.”
Academy of Management Journal, 47, 15–39.
Barker, J. R. (1993). “Tightening the Iron Cage: Concertive Control in Self-Managing Teams.”
Administrative Science Quarterly, 38, 408–437.
Burke, W. W. (2008). Organization Change: Theory and Practice (2nd ed.). Thousand Oaks, CA: Sage.
Cooke, R. A., and Szumal, J. L. (2000). “Using the Organizational Culture Inventory to Understand the
Operating Cultures of Organizations.” In N. M. Ashkanasy, C. P. M. Wilderom, and M. F. Peterson
(Eds.), Handbook of Organizational Culture and Climate. Thousand Oaks, CA: Sage, 147–162.
Cummings, T. G., and Worley, C. G. (2005). Organization Development and Change (8th ed.).
Cincinnati, OH: South–Western.
Daft, R. L., and Armstrong A. (2009). Organization Theory and Design (1st Canadian ed.). Toronto:
Nelson Education.
21
Leicht, K. T., and Fennell, M. L. (2001). Professional Work: A Sociological Approach. Oxford, UK:
Blackwell.
Lewin, K. (1951). Field Theory in Social Science. New York, NY: Harper.
Merchant, K. A. (1998). Modern Management Controls. Saddle River, NJ: Prentice Hall.
Meyer, J. P., and Allen, N. J. (1991). “A Three-Component Conceptualization of Organizational
Commitment.” Human Resource Management Review, 1(1), 61–89.
Miles, R. E., and Snow, C. C. (1978). Organizational Strategy, Structure, and Process. New York, NY:
McGraw–Hill.
Robertson, M., and Swan, J. (2003). “‘Control: What Control?’ Culture and Ambiguity within a
Knowledge Intensive Firm.” Journal of Management Studies, 4, 831–858.
Trice, H. M., and Beyer, J. M. (1984). “Studying Organizational Cultures through Rites and
Ceremonials.” Academy of Management Review, 9: 653–669.