Ecole Des Hautes Etudes Commerciales Affiliee a L'universite De Montreal

ECOLE DES HAUTES ETUDES COMMERCIALES AFFILIEE A L'UNIVERSITE DE MONTREAL

STRATEGIC ADAPTATION IN LOW GROWTH ENVIRONMENTS

par

William D. TAYLOR

TOME I

THESE PRESENTEE EN VUE DE L'OBTENTION DU GRADE DE PHILOSOPHIAE DOCTOR (Ph.D.) ACKNOWLEDGEMENTS

Any success that a doctoral student enjoys is obviously the result of the contributions of many people. Firstly, I am grateful to the members of my doctoral committee at Ecole des Hautes Etude Commerciales--Jean Guy Desforges (Chairman), Jean Marie Toulouse , and Francine Bernard—who have provided moral support, advice, and encouragement throughout ail of my doctoral programme. To the outside member of my committee, Henry Mintzberg of McGill University, I am particularly indebted. There can be no doubt that, whatever the contribution this research makes to the study of organizational strategy, it is due to Henry Mintzberg who inspired me by his ideas, by his innovative approach to the study of management, and by his never ending belief (I hope substantiated) in the potential of his students to become "organizational detectives". A special word of thanks is also extended to Ré jean Drolet my colleague at Bishop's University who assisted in the French summary included in this dissertation, and to the many individuals who provided information on the four organizations studied. Finally, I would like to express my love and appreciation to the two persons who have sacrificed the most so that I could complete this work. I am grateful to my daughter, Michelle, who cannot remember a period of her life when her father was flot working on some part of his doctoral programme, for her patience and help. The contribution of my wife, Ginette, to this under- taking cannot be measured. Not only has she sacrificed much so that I could complete my doctorate, but she has had to live every aspect of my programme including ail of the typing of both the rough and final drafts of this six hundred and fifty page dissertation. For her support, encouragement, and help I will

•be eternally grateful.

TABLE OF CONTENTS

ACKNOWLEDGEMENTS TABLE OF CONTENTS LIST OF FIGURES LIST OF TABLES LIST OF EXHIBITS FRENCH SUMMARY

Chapter INTRODUCTION 1 The Central Theme Of This Research The Specific Nature Of This Research Approach Used In This Research Contribution Of This Research Chapter Outline Summary

II REVIEW OF LITE RATURE 12 Strategy and Organizational Theory Evolution Of The Strategy Concept Positions Of Various Strategy Writers Concerning Constraints Research On The Strategy Formation Process The Content Of Organizational Strategies Studies On Strategic Response To Second Order Environmental Change Constraints On Strategic Adaptation Suggested In The Literature Summary

III METHODOLOGY 45 Problems Of Researching Organization Strategy Exploratory Research Research Design

Chapter Specific Problems Of This Research Summary

IV THE SHARED ENVIRONIAENT 69 Introduction and Purpose Demographics Of The English-Speaking Population Of The Eastern Townships The Eastern Townships Region The Quiet Revolution The General Environnent And The Anglo- phone Population Summary

V BISHOP'S UNIVERSITY 116 Background Summary Of Strategic Decisions Identification Of Strategic Periods Description Of Strategic Periods Constraints On Strategic Adaptation Summary

VI THE SHERBROOKE HOSPITAL 156 Background Summary Of Strategic Decisions Identification Of Strategic Periods Description Of Strategic Periods Constraints On Strategic Adaptation Summary

VII THE SHERBROOKE RECORD 193 Background Summary Of Strategic Decisions Identification Of Strategic Periods Description Of Strategic Periods Constraints On Strategic Adaptation Summary VIII CKTS RADIO 238

Chapter Background Summary Of Strategic Decisions Identification Of Strategic Periods Description Of Strategic Periods Constraints On Strategic Adaptation Summary

IX ENVI RONMENTAL CHANGE 268 Introduction Characteristics Of Environmental Change Impact Of The Quiet Revolution The Process Of Environmental Change Summary

X STRATEGIC CHANGE 293 Introduction Unit Of Analysis Characteristics Of Strategic Change Constraints On Strategic Adaptation Environmental Opportunities The Management Of Strategic Exit Factors Contributing To Strategic Change Summary

XI CONCLUSION 32 6 Introduction Changes In The Four Organizations Environmental Change Constraints On Strategic Adaptation Implications Of This Research For The Concept Of Organizational Strategy Implications Of This Research For Other Organizations Conclusion APPENDIX A INTERVIEWS CONDUCTED 346 vi

APPENDIX B BISHOP ' S UNIVERSITY 349

APPENDIX C THE SHERBROOKE HOSPITAL 426

APPENDIX D TI-EE SIIERBROOKE RECORD 525

APPENDIX E CKTS RADIO 591 BIBLIOGRAPHY 645 vi i

LIST OF FIGURES

Figure 1 Research Model 56 2 English-Speaking Population Of The Eastern 72 Townships As A Percentage Of The Total Regional Population

3 Relative Size Of The English-Speaking 73 Population By County 4 Quebec's Share Of Canadian Strikes And 109 Lockouts and Mandays Lost, 1946-1976

5 Summary Of Strategic Decisions, Bishop's 117 University, 1946-1976 6 Actual Enrollments Versus Announced 126 Maximum Enrollments, Bishop's University, 1946-1976

7 Sources Of Bishop's University Operating 135 Revenue, 1948-1975 8 Strategic Change - 1957, Bishop's 147 University

9 Strategic Change - 1971, Bishop's 151 University 10 Summary Of Strategic Decisions, The 157 Sherbrooke Hospital, 1946-1976 11 Strategic Change - 1962, The Sherbrooke 181 Hospital 12 Strategic Change - 1971, The Sherbrooke 187 Hospital 13 Summary Of Strategic Decisions, The 195 Sherbrooke Record - 1946-1976 14 Strategic Change - 1951, The Sherbrooke 227 Record 15 Strategic Change - 1969, The Sherbrooke 232 Record

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Figure 16 Summary Of Strategic Decisions, CKTS Radio 240 17 Strategic Change - 1966, CKTS Radio 261 18 Strategic Change - 1975, CKTS Radio 264 Appendix B - Bishop's University B1 Programme Strategies 351 - B2 Length Of Degrees Strategies 352 B3 Admission Requirements Strategies 354 B4 Maximum Enrollment Strategies 355 B5 Residence Strategies 357 B6 Recruitment Strategies 358 B7 Continuing Education Strategies 360 B8 Total Number Of Faculty 362 B9 Faculty Distribution By Area 363 B10 First Degree Of Faculty Members By 365 Country Bll Percentage Of Faculty Holding Earned 366 Doctorate B12 Anglican Clergy As A Percentage Of 367 Total Faculty 313 Balance Of Fixed Asset Account 374 B14 Capital Investment Strategies 375 B15 Cumulative Membership Of The Executive 378 Committee B16 Decision Making Strategies 384 317 Funds Received From The Quebec Government 387 B18 Government Financing Strategies 397 B19 Government Relations Strategies 406

Figure B20 Anglophone Community Relations Strategies 410 B21 Enrollment 413 B22 Number Of Degrees Awarded 415 B23 Degrees Awarded By Programme 416 Appendix C - The Sherbrooke Hospital Cl Services Strategies 434 C2 Outpatient Activity 435 C3 Outpatient Service Strategies 439 C4 Number Of Doctors On Staff 440 C5 Doctor Recruitment Strategies 446 06 Intern Strategies 451 07 Number Of Nursing Personnel 453 08 Nursing Personnel Strategies 459 C9 Undepreciated Fixed Asset Balance 469 010 Capital Investment Strategies 470 Cil Capital Investments Financed By 473 Government Funds C12 Capital Investment Financing Strategies 475 013 Total Revenues And Expenditures 476 014 Deficit As A Percentage Of Expenditures 477 015 Percentage Of Operating Revenue From The 482 Provincial Government 016 Operating Financing Strategies 486 017 Government Control Over Quebec Hospitals 491 018 Government Relations Strategies 496 019 University Of Sherbrooke Relations 499 Strategies

Figure 020 Relations With Other Hospitals Strategies 511 021 Community Support Strategies 514 C22 Total Admissions 515 023 Occupancy Rate 516 024 Total Operations 518 C25 Sherbrooke Residents/Total Admissions 519 026 Hospital Clientele 521 027 Revenues From The Annual Campaign 523 Appendix D - The Sherbrooke Record Dl Commercial Printing Strategy 529 D2 Editorials On Local Issues 531 D3 Editorial And News Content Strategies 538 D4 Frequency Of Editor Turnover 541 D5 Editorial Staff Strategies 543 D6 Average Daily Size Of Paper 544 D7 Features Strategies 548 D8 Cumulative Number Of Towns With Carrier 548 Delivery D9 Home Delivery Strategies 551 D10 Home Delivery And Newstand Prices 552 Dll Annual Postal Subscription Price 553 D12 General Advertising Rates 555 D13 Classified Advertising Rates 556 D14 Advertising Content Strategies 558 D15 Production And Fixed Asset Strategies 564 D16 Management Control Strategies 571

Figure

1J17 Annual Postal Cost Of Mail Subscriptions 573 D18 Average Price Per Ton Of Newsprint At 574 New York City D19 Audited Paid Circulation 584 D20 Average Weekly Size 588 Appendix E - CKTS Radio El Product Strategies 592 E2 Broadcast Area Strategies 596 E3 C.B.C. Affiliation Strategies 603 E4 Percentage Programming In Various 608 Categories E5 Music Programming Strategies 611 E6 News And News Related Progranming 614 Strategies E7 Community Public Affairs And Educational 616 Programming Strategies E8 Religious Programming Strategies 618 E9 Sports And Variety Programming Strategies 621 El0 Advertising Rate Strategies 622 Ell Prime Time Strategies 624 E12 Sales Strategies 625 E13 Sales Personnel Strategies 628 E14 Capital Investment Strategies 632 E15 Personnel Strategies 635 E16 Administrative Strategies 637 El7 Anglophone Community Strategies 639 El8 Regulatory Agency Strategies 641 E19 Weekly Total Audience 643

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LIST OF TABLES

Table 1 Size Of The English-Speaking Population 73 By County, 1946-1976 2 Percentage Of Quebec Population In 77 Administration Region -05 3 Percentage Urbanization In Administrative 78 Region -05 4 Historical Eastern Townships, Structure Of 79 The Active Labour Force, 1951 5 L'estrie - Structure Of the Active Labour 80 Force, 1961 and 1971 6 Years Of Quebec Educational System Taught 139 At Bishop's University 7 Summary Of Major Environmental Changes 271 8 Summary Of Strategic Changes 297 9 Summary Of Constraints On Strategic 306 Adaptation Appendix B - Bishop's University B1 Undergraduate Degrees As A Percentage Of 417 Total Degrees Awarded B2 Permanent Residences Of Student Clientele, 418 1946 to 1953 B3 Permanent Residences Of Student Clientele, 420 1961 to 1968 B4 Declared Religious Affiliation Of Students 421 B5 Origins Of New Students 422 Appendix C - The Sherbrooke Hospital Cl Accounts Receivable Statistics 480 'Appendix D - The Sherbrooke Record Dl Editorials On Local Issues 535 Table D2 Carrier Distribution Service, 1964 550 D3 Audited Paid Circulation 585 xiv

LIST OF EXHIBITS

Exhibit Appendix E - CKTS Radio El C.B.C. Network Reserve Time, October, 1964 601 E2 CKTS Programme Listing, September 10, 1947 605 E3 CKTS Programme Listing, September 24, 1953 607 XV

RESUME DE SYNTHESE

Préambule

Comment les organisations sont-elles contraintes dans leur capacité à répondre à des changements se déroulant lentement • et ce, dans des environnements a croissance négative ou faible? Cette recherche vise essentiellement à répondre à cette question. L'analyse repose sur le processus de changement suivi par quatre organisations anglophones situées dans les Cantons de l'Est au Québec, au cours de la période 1946 à 1976: The Sherbrooke Record, un quotidien anglophone a faible tirage; CKTS Radio, une station radiophonique d'une puissance de 10,000 watts; Bishop's University, une université résidentielle de premier cycle; et le Sherbrooke Hospital, un hôpital anglophone de 141 lits. Cette recherche a été entreprise dans le but de remédier à deux critiques apportées à la recherche existante en stratégie. Premièrement, elle se situe au niveau de petites organisations et tente donc de foùrnir certains résultats concernant le concept de choix stratégique dans ces dernières. Deuxièmement, étant de nature longitudinale, elle permet d'examiner les contraintes provenant de décisions passées ainsi que leur évolution. Méthodologie Deux processus connexes sont examinés dans cette recherche: le processus par lequel des changements dans l'environnement auront un impact direct sur une organisation; et le processus par xvi

lequel cette dernière perçoit ces changements et éventuellement se décide à leur faire face ou autrement apprend à accepter les conséquences de leur impact. Les deux processus requièrent une méthodologie longitudinale très détaillée. La méthodologie utilisée dans cette recherche est une adaptation de celle développée à l'Université McGill pour l'étude de la stratégie organisationnelle. En définissant la stratégie comme un modèle dans un éventail de décisions, cette méthodologie comporte quatre étapes: 1) le développement d'une liste chronologique de décisions importantes prises par l'organisation durant la période de l'analyse, 2) l'inférence de stratégies provenant de cette liste chronologique, 3) l'analyse intensive des périodes de changement straté- gique, 4) l'analyse des résultats Résultats En tenant compte de l'ensemble de la période, la position de la communauté anglophone et celle des institutions anglophones s'est grandement altérée de 1946 à 1976. La communauté anglophone des Cantons de l'Est est certainement devenue moins importante dans la région, émergeant distinctement comme minorité linguis- tique durant cette période. Jouissant d'une position rassurée et optimiste en 1946, ces quatre institutions anglophones en sont venues à se maintenir sur la défensive et ont été en 1976, dé- / cidément plus pessimistes en ce qui concerne leur futur en tant qu'institutions anglophones. xvii

La processus de l'impact des changements de l'environnement sur les quatre organisations comporte plusieurs caractéristiques. De fait s les changements de l'environnement Sont apparus de nature multi-dimensionnelle. La plupart de ces changements étaient problématiques, avec de l'incertitude existant quant au résultat final de leur direction dans environ la moitié des cas. Il a été noté que l'incertitude était substantiellement plus élevée au niveau d'une organisation spécifique. Les effets de la Révolution Tranquille furent plus directs dans le cas de Bishop's University et du Sherbrooke Hospital que dans celui des deux organisations à but lucratif. De plus, bien que les changements de l'environnement découlant des changements sociaux de la Révolution Tranquille/ aient été, en grande partie, négatifs pour les deux organisations à but lucratif, ils ont eu des conséquences positives pour les organisations à but non lucratif. Cette recherche a permis de déceler trois importants stages au développement du ,changement dans l'environnement: 1) la formation, soit au moment du développement des changements sociaux, technologiques ou scientifiques; 2) la direction, ou comment la société fait face à ces changements; 3) l'impact, soit lorsque les conséquences spécifiques de ces changements deviennent connues au niveau de l'organisation donnée. L'ensemble des ajustements ou changements d'adaptation au niveau de ces organisations pourrait être décrit comme une combinai- son de rationalition , soit le retrait de certaines stratégies concernant en général leur clientèle anglophone et le dévelop- pement de stratégies de croissance dans de nouveaux marchés ou services, lesquelles étaient surtout dirigées vers le plus vaste marché francophone. Dans les organisations étudiées, les processus de changement stratégique ont été largement limités par les contraintes internes. Dans l'ensemble, la nature culturelle de ces quatre organisations ainsi que leur importance dans la communauté anglophone étaient en soi un obstacle à leur adaptation aux changements de l'environnement. A notre grande surprise, ce phénomène se retrouvait tout aussi bien dans les organisations à but lucratif contrôlées par des francophones. Une source de contrainte majeure sur le changement stratégique dans les quatre organisations s'est révélée être leurs actions et stratégies antérieures. Bien que le carac- tère institutionnel aiieertainement été bénéfique pour ces organisations, il n'y a aucun doute qu'une fois réalisée à l'aide de stratégies particulières, cette identité a entravé le changement stratégique. Même lorsque les administrateurs, ou personnes influentes, décidaient de changer la stratégie de l'organisation, un second problème relié aux stratégies antérieures demeurait: comment mettre en place la nouvelle stratégie sans pour autant diminuer l'appui des clients et bienfaiteurs traditionnels de l'organisation? Le fait d'abandonner une stratégie avant qu'une autre n'ait été implantée avec succès entraîne une incertitude sub- xix stantielle. Le procédé de l'abandon stratégique est apparu extrêmement critique pour au moins trois des quatre organisations. La façon par laquelle se produit l'abandon d'une stratégie semble avoir beaucoup d'effet sur la facilité qu'a l'organisation à établir une nouvelle approche stratégique. Nous pouvons stipuler que ce processus a peut-être été aussi important pour les quatre organisations que celui du développement de nouvelles stratégies. Plusieurs facteurs ont contribué à l'existence d'opportu- nités pour chacune de ces organisations. Néanmoins, ces opportunités ne s'avéraient utiles que lorsque la direction de ces quatre organisations avait la volonté d'agir. Tel que prévu, les deux organisations à but lucratif étaient avantagées parce qu'elles n'avaient pas à supporter une structure de prise de décision des plus complexe. Cependant, l'importance de cet avantage peut être réduite soit par l'inattention ou les valeurs d'un propriétaire. En deux occasions, une nouvelle administration fut requise avant qu'une opportunité puisse être pleinement exploitée. Les contraintes externes à l'adaptation stratégique de ces quatre organisations étaient de deux sortes: la compétition et la réglementation gouvernementale. Nous retrouvons ces contraintes dans les organisations à but non lucratif et lucratif. En fait, aucune différence réelle n'a été perçue entre les deux groupes pour ce qui est de l'importance des contraintes externes. Ceci pourrait suggérer que la littérature sur la stratégie met trop d'emphase sur l'importance des contraintes externes sur l'adaptation stratégique des organisations à but non lucratif. En résumé, plusieurs points reliés à la stratégie organisationnelle ont été soulevés dans cette recherche. Le premier point démontre que/ même si le rôle des pressions de l'environnement était significatif dans l'instauration de changements dans les quatre organisations, l'éventail des décisions de chacune d'elles démontre clairement le rôle critique de l'action directo- riale sur l'adaptation organisationnelle. Les changements apportés étaient relativement importants. D'une part, la vitesse d'adaptation organisationnelle ainsi que la direction suivie vont dépendre grandement de la qualité du jugement straté- gique. D'autre part, les contraintes externes sur l'adaptation stratégique sont apparues comme très peu rigoureuses permettant ainsi plusieurs actions organisationnelles. Plusieurs implications ressortent de cette étude: 1) une réaction tardive au changement stratégique peut s'avérer coûteuse en terme d'opportunités manquées; 2) le procédé de l'abandon stratégique est beaucoup plus important que prévu; 3) la volonté de changer ne peut pas être supposée comme donnée dans une organisation - il faut souvent la développer; 4) les énoncés explicites de changement peuvent souvent être nuisibles si le changement stratégique est controversé; 5) il devient de plus en plus évident que des changements globaux dans la stratégie d'une organisation puissent nécessiter une nouvelle équipe de direction. Les résultats de cette recherche démontrent que dans toute xxi organisation, nous retrouvons deux dimensions aux contraintes sur le choix stratégique: la volonté, le désir de changer et le pouvoir, la capacité, soit les ressources requises pour changer. Bien souvent, la volonté de changer semble être le facteur le plus limitatif. CHAPTER I

INTRODUCTION

1.1 The Central Theme of This Research How are organizations constrained in their ability to respond to environmental change? In particular, how do they respond to slowly-evolving changes in declining, or low growth environments? These two questions are at the core of what this research is about. Essentially, what will be looked at is the process by which four organizations changed over . a thirty year period in response to an apparently declining environment. The phenomenon of organizational change is a key element in the study of organizational theory; yet, in many respects, we still know very little about this important subject which affects every member of our society. There are those that argue that organizations are greatly constrained in how they respond to environmental change, and there are others who believe that despite environmental pressures a great deal of room exists for organizational maneuvers. Un- fortunately, there has been very little research which attempts to look specifically at the constraints on organizational adaptation over a long period of time. In many respects this is surprising, especially for researchers of 2 managerial processes, in that the initial concept of organizational stategy developed by Alfred Chandler (1962) originated from a longitudinal study. There cari be no doubt that much of the organizational research on strategy which has followed Chandler has been concerned with organizational change and its effects on strategy, structure, and performance; however, the subject, for the most part, has been approached in such a limited way that we still know relatively little about the process of organizational adaptation, and the constraints on the ability of organizations to adapt to environmental conditions. Two other criticisms can also be made against the research whichha,estaken place on organizational adaptation. The first is that, on the whole, it has tended to concentrate on larger organizations and has ignored the constraints on strategic adaptation of smaller organizations. In fact, this distortion may have contributed to the on-going debate between advocates of strategic choice and population ecology. For example, in a recent book, an advocate of the population ecology model, Aldrich (1979),Jhas questioned whether strategic choice exists only for large industrial firms who have sufficient market power to enact their environments. An additional criticism of the existing research on the constraints on strategic adaptation is that the bulk of this work is based on a framework which assumes that the management of growth is the dominant organizational concern (Whethen, 1980). Retrench- ment and strategic retreat have received very little attention. 3

1.2 Specific Nature Of This Research Specifically, this research examines the constraints on strategic adaptation of four English-oriented organizations in the Eastern Townships of Quebec during the period 1946 to 1976. The selection of these dates is important in that English-oriented organizations in the Eastern Townships faced a changing environment, especially after 1960, which greatly affected their client groups, their growth rates, their resource bases, and their optimism for the future. Beginning with the election of the Lesage government in 1960, Quebec underwent a number of critical changes during a period whichhas corne to be known as the Quiet Revolution. The English-speaking community of the Eastern Townships and its institutions were affected by the major elements of this period of social change: growing socio-political unrest, rising economic nationalism, increased interest in social democracy, reform of education, and increased public investment. The changing environnent English-oriented organizations faced during this period provides an excellent opportunity to study in depth how four organizations, important to their community, have dealt with major changes in their environments. The goal then is to generate hypotheses to explain strategic change which can be tested in further research. The four organizations studied in this research are described below: - The Sherbrooke Record is a small Englieh-language 4

(6,000 to 10,000 paid circulation) daily newspaper which has been in existence for over 100 years. The Record has undergone three changes in ownership since 1946, and has been owned by such well known individuals as John Bassett and Conrad Black. - CKTS is a small (10,000 watt) radio station serving the Sherbrooke area of the Eastern Townships. Founded in 1946,ownership of the station has changed hands several times, and since 1970 it has been part of Télémedia Ltee. - Bishop's University is a residential, undergraduate university offering programmes in liberal arts, science, and business administration. Founded in 1845, it was controlled by the Anglican Church for many years. The enrollment has never exceeded 1,300 full-time students. - The Sherbrooke Hospital is a 141 bed hospital which has been serving the population of the City of Sherbrooke and vicinity since 1888. At present, it is classified as a short to medium duration, specialized general care hospital facility by the Quebec government. Traditionally, it has enjoyed a high degree of financial support from the English community. These four organizations were selected for a number of reasons. The first stems from the fact that this research is exploratory, hoping to evoke hypotheses about the strategic 5 responses of organizations to slowly evolving changes in their environments. Because ail of these organizations had a significant English-speaking clienteles prior to 1960, one could presume that saine strategic response was called for,given the decline of the anglophone population. It should be noted that many organizations dominated by English-speaking management and staff existed in the Eastern Townships in the late 1940's; however, organizations selling products which were relatively independent of language were presumed not to have the saine need for strategic response. The changes they were required to make were of a more internai, and certainly less strategic, nature. A second reason for selecting these organizations is that, as a group, they offer a diverse group of services ta the English-speaking community. In addition,it was presumed that they would vary in the degree that technology, competition, structure, and the regulatory contrai they faced would provide constraints on their strategic responses. If one re- calls that the primary objective of this research was to evoke possible hypotheses concerning strategy, the logic of including organizations of such diverse technologies, structures, and profit-orientation is, perhaps, more clear. A final reason for the selection of these organizations was that there appeared ta be sufficient sources of data ta permit investigation of the strategies employed by each of these organizations during the period 1946 ta 1976. Many small, 6 privately owne-d organizations do not, or will mot, make available a great deal of data about their activities. This can be a particular problem if the period to be researched is long, involving decisions made twenty-f ive to thirty five years ago. The existence of public documents guaranteed that access to these organizations would flot be a problem, despite changes of ownership. 1.3 Approach Used In This Research This research is concerned with the constraints on strategic adaptation in declining environments. Thus, it was necessary to study two different, yet related, processes to be able to gain an understanding of how organizations are constrained. The first process is related to environmental change and how environmental changes start and move from rather vague phenomenon, distant from the organization, to concrete events, or trends, having direct impact on the organization. The second element is the process by which organizations perceive these changes and eventually either make strategic decisions to deal with them, or learn to accept the consequences of their impact. Both of these processes require very detailed research methodologies of a longitudinal nature. Other, more quantitative, approaches were rejected because they do not provide the richness necessary for this type of research. The methodology used to gather data for this research was a form of direct research developed at McGill University specifically for use in the study of organizational strategy and the strategy formation process. The first three steps of the McGill approach were employed in this research. Step one involved the development of a chronological listing of the important decisions made by each organization over the period 1946 to 1976, and a chronological listing of the key events, and trends which took place in each organization's environment. The second step involved the inference of strategies from the chronological listing of the key decision streams. The final step used in this research involved intensive analysis of the specific periods of change in each organization's strategies with increased search for detail in the period of change. In addition to the McGill approach, data for each organization was analyzed to determine the major constraints on strategic adaptation, and the process by which environmental changes evolved to finally impact the organization. Finally, a comparison was made of the results of the analysis for the two not-for-profit organizations and the two profit-oriented organizations as well as the four organizations together. 1.4 Contribution Of This Research It is hoped that this research will contribute to knowledge in the business policy/strategy area in a number of ways. First, this research further explores, elaborates and tests the usefulness of the concept of strategy. There cari be no doubt that the debate over what constitutes organizational strategy has not yet been resolved. It is hoped that 8 this research, which has as its unit of analysis the strategic decisions of a number of organizations and which employs a methodology specifically developed to study strategy, will clarify sortie of the unresolved issues relative to this debate. In addition, this research deals with strategy formation in smaller organizations, and with organizations facing retrenchment, both areas where the usefulness of the strategy concept has not been well demonstrated. More precisely, this research examines those factors which constrained the strategic response of four organizations that faced important environmental changes. This area is one where little empirical research of a longitudinal nature has been undertaken; and it is hoped that the hypotheses developed as to how organizations are able to alter their domain definition and domain navigation strategies, in response to slowly evolving environmental changes, will be of use to future researchers in this area. A second area which has received little attention from researchers of organizational phenomenon is the process by which changes in an organization's general environment eventually become specific constraints on organizational action. This research examines this process and develops some hypotheses concerning how environmental change impacts an organization; and in particular it details how the elements of the Quiet Revolution, a significant period of social change in the history of Quebec and Canada, actually affected decisions 9 at the organizational level. Finally, it is hoped that this research contributes to knowledge because it establishes and describes how certain organizations faced with important social changes in their environments were, or were not, able to respond to those changes. This may permit other organizations, faced with similar crises, to mitigate the effects of these crises on their various stakeholders, and on society in general. 1.5 Chapter Outline Following this introductory chapter, Chapter II of this thesis reviews the development of the concept of strategy, situates the strategy literature with respect to organizational theory in general, and discusses existing research findings dealing with the constraints on strategic adaptation. Re- search both on the content of organizational strategies, and the process of strategy formation is reviewed. In concluding, Chapter II presents some of the factors which have been suggested to be constraints on organizational adaptation. Chapter III is devoted to the methodology used in this research. Some of the difficulties of researching a complex phenomenon such as strategy are examined as well as the advantages and disadvantages of qualitative research and the McGill appraach of direct research. Finally, the methodological problems arising out of this research are outlined in detail. In Chapter IV a brief outline of the broad environmental 10

changes which impacted ail of these organizations is presented. It is felt that such a chapter detailing major changes in the demographic, economic, social, and political environments which were common to ail four organizations is useful in clarifying the specific environmental changes by which each organization was affected. Chapter V, VI, VII, and VIII describe the results of this research. The strategies of each organization, the strategic periods which have been inferred, and the major environmental events affecting each organization are analyzed. Next the process by which major environmental events evolved to impact the organization is developed, and then the factors which constrained the organization from responding to these changes are analyzed. In Chapter IX the processes by which environmental changes had impact are examined. Chapter X analyzes the similarities and differences in the strategic change processes of the four organizations. Chapter XI of this thesis offers a conclusion and makes some suggestions for future research in this area. 1.6 Summary This chapter has introduced the subject of what this research is about: How are organizations constrained in their ability to respond ta environmental change? After the importance of this topic ta the entire concept of organizational strategy was briefly pointed out, the lack of longitudinal, 11 qualitative research was noted. The four organizations to be investigated in this research were presented as was the methodology to be used in this investigation, an approach involving direct research of each organization's major decisions. The need for empirical research on strategic adaptation to slowly evolving environmental change in smaller organizations was then argued. Finally, an outline of each chapter of this thesis was presented. CHAPTER II

REVIEW OF LITERATURE

2.1 Strategy And Organizational Theory The study of organizational theory reveals two rather broad approaches, or perspectives, concerning the nature of organizational change. One approach most commonly labelled the ecological perspective (Hannan and Freeman, 1977) concerns itself with the selection process in nature and the existence of patterns arising from this selection process. The second, and perhaps mainstream, approach in organizational theory has been labelled the adaptation perspective because it focuses on the effects not only of environmental elements on organizations, but also on the way managers, or dominant coalitions, construct strategies, make decisions, and generally influence the affairs of organizations. Miles, Snow, and Pfeffer (1974) have pointed out the implications of the arguments of Stinchcombe (1965) and Alchian (1950) for the study of strategy. Stinchcombe has argued that organizations develop certain characteristics of the time they are formed related to conditions existing at the time of the birth of their industry, and these characteristics --structures, processes, and norms of behaviour --do not fade away easily, and tend to remain with the organization, 1 3

even though their appropriateness may have long since passed. Alchian has argued that organizational growth can be pictured as one of natural selection with chance alone determining that certain organizations will have characteristics more consonant with environmental conditions. Success- ful organizations are imitated by other organizations, although the process of imitation is never perfect. In essence then, onecan see that Alchian's argument is that rational adjustment of environmental relationships is not necessarily a condition for organizational growth and development: choice and imperfect imitation can also be regarded as a logical model for growth, and imperfect imitation can also be regarded as a logical model for growth processes. Taken together, the arguments of Stinchcombe and Alchian may appear to discourage efforts to describe relationships between organizations and their environments. That is, if as Stinchcombe argues, organizational structures and processes are natural products of cultural norms and capabilities, then initial choices of domain, strategy, technology, etc. among organizations in older industries are greatly constrained. Moreover, if one adopts Alchian's view, chance variation may well be the key to - success Tbus o _neither the original set of decisions nor subsequent adjustments would appear to turn on the correctness of managerial choice --in fact, what might first appear to be a poor adjustment could later prove to be a triumph of unintended foresight.1

1 R.E. Miles, C.C. Snow and J. Pfeffer, "Organization Environment Concepts and Issues", Industrial Relations, Vol. 13 (October, 1974), p.260. There can be no doubt that the organizational strategy literature is planted firmly in the counter position to the natural selection perspective: the strategy literature perceives successful organizations to be those where managerial choice has played a critical role in thecprocess of coalign- ing organizational activities, and direction, with environmental threats and opportunities. In fact, the concept of organizational strategy, or rational selection, is a fundamental element in the adaptation perspective (Aldrich, 1979). Child (1972) has argued that without the introduction of managerial, or strategic, choice it is very difficult to establish the relationships between environmental, technological, and structural variables. Simple theory is inadequate to explain organizational processes, he argues, because choice contaminates the findings of research studies. Child outlines three areas in which choice exists and extends: 1. to the context within which the organization is operating. 2. to the standard of performance against which pressure of economic constraint has to be evaluated. 3. to the design of the organization's structure.2

Environment Concepts and Issues", Industrial Relations, Vol. 13 (October, 1974), p.260.

2 J. Child, "Organizational Structures, Envionment and Performance: The Role of Strategic Choice", Sociology (January, 1972), p.2. 15

The complexity of trying to establish whether environmental, or leadership, variables are more important in changing organizations means that this debate between proponents of the adaptation perspective, and the natural selection perspective is likely to continue. It is safe, however, to take the position that both types of factors have a part to play in explaining how organizations change. 2.2 Evolution Of The Strategy Concept The use of the terni strategy has undergone many changes over the last twenty-five years. Steiner and Miner (1977) have noted these changes beginning with the use of the term by Kootnz and O'Donnell (1955) in its true military sense -- the action of the manager to counter actual or potential actions of competitors. Chandler in his classic work, Strategy and Structure, (1962) added to this meaning by introducing the allocation of resources to the strategy concept. Chandler defined strategy as, "the determination of basic long-terni goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out this goal."3 For most students of management, one of the more fam- iliar definitions of strategy is that which emerged from the "Harvard Group" in the late 1950's:

3Alfred D. Chandler, Jr., Strategy and Structure, (Cambridge: The Press, 1962), p.13. 16

Strategy is a pattern of objectives, purposes, or goals and major programs and plans for achieving these goals in such a way to define what business the company is in, and the kind of company it is, or is to be.4 While many authors have defined strategy in a slightly different way (Ansoff, 1965, has described strategy as "a concept of a firm's businese), the mainstream approach has been to util- ize a definition of strategy similar to that of the "Harvard Group". Very few writers have made major contributions to the development of the concept; Steiner (1977) is one notable exception. Much of the early literature found in the strategy area was prescriptive, with little systematic research to actually explore and probe the notion of strategy in an empirical sense. The publication of Chandler's work sparked other studies on this same issue,which has come to be known as the strategy, structure, performance paradigm (Thorelli, 1977). For example, Fouraker and Stopford (1968) extended Chandler's findings to the study of multinational companies noting that organizations with a divisionalized structure were better able to move into foreign markets and develop foreign operations. The work of Wrigley (1970) and Rumelt (1974) has also been important in extending this une of research.

4 Kenneth R. Andrews, The Concept of Corporate Strategy, (Homewood, Illinois: Dow Jones-Irwin, Inc., 1971), p.28. 17

In more recent years, an expanded concept of strategy has emerged from a group of strategy writer who take what has been called a neocontingency perspective. In this group, one could include Miles and Snow (1978), Mintzberg (1978), the Gothenberg researchers Hedberg and Jonsson (1977), Rhenmann (1973), Norman (1977), and Robert Miles (Miles and Cameron, 1977). Additionally, certain members of the Harvard policy group, such as Bower (1970) and Ackerman (1975), have completed research which brings them close to this perspective. Few of the approaches to the study of strategy of the people mentioned here are inconsistent with the following position: We have characterized the neocontingency perspective as one that (1) views managerial or strategic choice as the primary link between the organization and its environment; (2) focuses on management's ability to create, learn about, and manage the organizations environment; and (3) encompasses the multiple ways that organizations respond to environmental conditions.5 It is evident that these writers have expanded the rather narrow concept of strategy used by those following the mainstream, or Harvard, concept of strategy. The neocontingency approach rejects the position that strategy must be explicitly and purposefully developed. They argue that unintended, or emergent strategies cari also be found in organizations. Mintzberg

5R.E. Miles and C.C. Snow, Organization Strategy, Structure and Process (New York: McGraw Hill, 1978), p.263. 18

(1978) has argued that the definition of strategy as a pattern in a stream of decisions is extremely important, because it permits research ta actually take place on the phenomenon. 2.3 The Positions Of Various Strategy Writers Concerning Strategic Constraints Within the strategy area, various writers have taken different positions concerning the severity of constraints on organizational adaptation to environmental change. It should be emphasized, nevertheless, that ail writers supporting the concept of strategy believe in some amount of strategic choice, the difference being in the degree to which they perceive various constraints limit managerial discretion. The first group that cari be identified within the strategy area can be called the "strategic management" group. This group includes the work of several subgroups and individuals, however, the basic similarities of the concepts of strategy used allows us to classify these various writers and researchers into one group. Included in this group is the work of Ansoff (1965); the Harvard Group of strategy professors (Andrews, 1971); strategic planners such as Steiner (1979); more general strategic management advocates such as Cannon (1968) and Katz (1970); and finally more recent researchers such as Schendel and Hofer (1978). While this group has received increased criticism in the recent past (Mintzberg, 1977), it is fair to say that it also represents what has been the mainstream of thought concerning the study of strategy. 19

In examining the implicit approach taken to strategic choice by members of this group it is evident that both a strong belief in the liberty of action of those guiding organizational direction can be found, as well as a position that in any given strategic situation the environment deter- mines which approach will be most effective. To reconcile these two seemingly contradictory positions it is necessary to distinguish between two different types of managerial discretion: domain definition strategy, which refers to an organization's choice of domain; and domain navigation strategy, which refers to the competitive decisions made within a particular product market, industry, or task environment (Bourgeois, 1980). The "strategic management" group appears to take the position that environmental conditions, including the actions of competitors, dictate the type of strategy that is best for a given firm (relative to its strengths and weaknesses) in a given situation. In other words, once an organization is in a specific strategic situation, it is the situation which dictates what should be done and the organization has little liberty to do much about these constraints. The analytical aspect of this approach is concerned then with delineating and identifying these constraints. The position of this group is much different, however, when we turn to the level of choice concerned with the selection of a strategic situation. If we look more closely at this 20 approach, it is clear that one of the underlying assumptions which emerges is that an organization faces few constraints with regard to the selection of a strategic situation. Much of the analysis advocated by this group has as its fundamental objective the selection of a domain where the organization cari take advantage of its strengths, and various opportunities which exist in the environment. Obviously, if the strategy formation process is to be analytical, management in the final analysis must have the power and capability to guide and control the strategic moves of the organization. As mentioned previously, the "neocontingency group" of strategy writers takes the position that management has a great deal of latitude in adapting to environmental change. Additionally, this group argues that the severity of constraints on organizational adaptation will vary from case to case, and from organization to organization. Thus, while some of these students of strategy would place more emphasis on the constraints emerging from the organization's environment, and a larger number would place greater influence on those constraints arising from within the organization itself, ail would argue that the amount of liberty of action is contingent upon a complex configuration of factors. In other words, the type of strategy formation that exists will differ for various organizations. Consistent with the large amount of strategic discretion this group assumes exists in organizations is another assumption that management has some ability to learn about the organ- 21 ization's environment. In many cases this also means that management has the ability to cope more effectively with its environment and even control it to some degree. This view- point is particularly strong in the writings of Norman (1977) and Miles and Snow (1978). On the other hand, the contingent nature of the strategic choice concept perceived by this group also allows it to include organizations where the number and tightness of constraints, both internai and external, severely restricts organizational freedom of action. Another important characteristic shared by members of the "neocontingency group" is the belief that patterns cari be found in the way different firms react and respond to various constraints and conditions. For example, Miles and Snow (1974) have identified four archetypes of response to environment each consisting of a particular configuration of technology, structure and process that is consistent with a particular strategy. The authors label these ,archetypes the. Defender, the Analyzer, the Prospector and the Reactor. This position is similar to that of Mintzberg (1976) who believes that a second type of pattern--a pattern in an organization's own adaptat- ions--can be identified as well, and that the forces which influence strategy vary to a great degree among organizations: Strategy can then be viewed as the set of consistent behaviors by which the organization establishes for a time its place in its environment, and strategic change can be viewed as the organization's response to environmental change, constrained by the 22

momentum of the bureaucracy and accelerated or dampened by the leadership.6 A final point should also be emphasized with the "neocontingency group". Unlike most members of what we have called the strategic management group, the neocontingency group rejects the idea that there is one best way to adapt to the constraints of a particular situation. Consistent with their view on strategic choice, they argue instead that thei-e are many equally effective ways to adapt to the constraints of a given strategic situation. 2.4 Research On The Strategy Formation Process A second major dichotomy is also important in understanding the research which has taken place in the strategy area. Many writers (Hofer, 1976; Steiner and Miner, 1977; Bourgeois, 1980) have noted the difference between studies which are aimed at the process by which strategy is formed in an organization, and those studies which have as their unit of analysis the content of the strategies taken by various organizations. Within the process group of strategy research studies, most of the research activity has been directed at planning and its alleged benefits in the formulation of strategy. In fact, the strategic planning research paradigm has received

6 H. Mintzberg, "Patterns in Strategy Formation", Management Science (May, 1978), p.941. 2 3 along with the structure performance paradigm most of the attention of those working the strategy area. Advocates of strategic planning argue that, especially in large organizations, the complexity of the managerial task requires a formal and systematic approach to the establishment of an organization's strategy. Hofer (1976) has prepared a comprehensive review of research findings in the strategic planning area. Unfortunately, the major works which have attempted to establish the benefits of formal strategic planning have been rather inconclusive (Ansoff et al, 1970; Rue and Fulmer, 1973). In more recent years, behavioural and social system effects of the strategy formation process have received increasing attention. Building on the seminal work of Cyert and March (1963), which developed a behavioural theory of organizational decision making, a picture of how organizations actually make choices concerning strategic direction is beginning to emerge. The work of Carter (1971), Lindblom (1963), Allison (1971), and others has been important in defining how the process used by an organization to make strategic decisions influences those very decisions. The more important aspects which emerge from this work can be summarized as follows: 1. Many organizational levels and subunits have goals, and in the process of the operationalization of these goals overall organizational goals can be filtered and distorted. 2. Because of these divergent goals, the process of establishing overall organizational direction often resembles bilateral negotiations (Carter, 1971) and occurs sequentially between various groups in the organization. 24

3. The stream of actions necessary to corne to ultimate decisions results in the absorption of uncertainty by different lower hierarchial levels of the organization. 4. Communication flows and standard operating procedures have a strong influence on the final outcomes of strategic choice. Additional work has also been carried out in attempting to determine the relative amounts of power various groups in the organization have. Allison has developed what he calls the bureaucratic politics model (Allision, 1971) to investigate this phenomenon. His model is concerned with the dynamics of the power relationships which occur in organizational decision-making processes. While many writers have developed typologies of power (French and Raven, 1959;. Etzioni, 1969; Perrow, 1972; Crozier and Friedberg, 1977), and others have investigated the importance of political processes for organizational decisions, ail that can be stated with any certainty at this point is that a "top down" view of strategic choice is in many cases inappropriate for understanding the strategy formation process. This brief review of some of the work which has taken place on the strategy formation process lends to two conclusions. The first is that different modes of strategy formation exist in different organizations. Mintzberg (1973), for example, has identified three "pure" modes--the entrepreneurial mode, the adaptive mode, and the planning mode--each of which makes different assumptions concerning constraints on the strategic decision process. Secondly, there appears to 25

be a relationship between performance and the matching of a particular type of strategy formation process and a particular organization situation. Simply put, some modes of strategy formation seem ta work better in a given type of organization. 2.5 The Content Of Organizational Strategies A great deal of research has taken place on the content of organizational strategies. In examining this research it is helpful to think of two different levels on which this research has developed. One is the domain ( or role) an organization wishes to occupy (or perform) in society. The second concerns how the organization will behave once it has selected a particular domain. Domain selection and domain navigation are the terms which have been employed for these two different levels of strategy (Bourgeois, 1980). Some strategy theorists have put this issue differently (Hofer and Schendel, 1979): they note the difference between the issue of what type of business an organization is in, and the issue of how does the organization operate given that it is in a specific situation. The selection of organizational domain has received bath theoretical and empirical attention. The fact remains, however, that most of the work in this area has been prescriptive and few substantive findings have emerged concerning what factors determine whether an organization's domain is suitably matched with its strengths and competences, or vice 26 versa. The corporate, or portfolio, level of strategy just does not lend itself very readily to traditional types of research, especially on those issues which are of fundamental importance to the strategy phenomenon. The work of Chandler (1962), Wrigley (1970), and Rumelt (1973) mentioned earlier are exceptions to this statement. Nevertheless, certain more process-oriented studies have shed light on the selection of an organization's domain. Miller and Friesen (1978) were able to develop and describe ten archetypes in relating successful and unsuccessful firms with environmental characteristics, environmental diagnosis, leadership, and resources. Using Q-type factor analysis with orthogonal rotation they found that for successful archetypes it seems that a variety coping methods can be effective depending upon the nature of the environment, and an assortment of complementary and strategic attributes. In a more recent research study (1980), the saine authors have noted the importance of momentum, rather than resistance to change, in the study of organizational adaptation; in part, they believe that is why organizations seem to evolve in a fashion similar fo Thomas Kuhn's (1962) model of scientific revolution. Studies of corporate downturn phases completed by Schendel, Patton and Riggs (1976), and Miller and Friesen (1978), further support the complex and indeterminant nature of the relationship between environmental variables and the selection of organizational domain. These researchers found 27 that a combination of events, or actions, is required to cause severe decline in income in established manufacturing firms. In other words, it is difficult to isolate any one variable as being of particular importance to the health of an organization. Variables, especially those concerned with strategy, must be considered as a group in relationship to each other if they are to have meaning. Research on the content of domain navigation strategies has been more extensive than research on domain sélection strategies. The most widely known research in this area is the PIMS studies which have gathered data on a number of large American businesses to study the effects of factors such as market share and investment practices on corporate performance. The Boston Consulting Group has also been active in analyzing multiple-product companies and the importance of market share for growth and profits. 1-lofer (1976), Glueck (1976), and Steiner (1979) have made important contributions to the study of domain navigational strategies by attempting to develop contingency theory to cope with the many variables implicit in the study of strategy based on the product life cycle. An example of this type of research is the work of Hatten (1978) who studied the activities of different brewing companies using COMPUSTAT tapes and Advertising Age. Hatten found that firms in the brewing industry could be clustered into several groups each having different ROI potentials and more significantly, different needs in ternis of type of 28

marketing strategies which would be profitable for them. The exact constraints a profit-oriented organization faces, stemming from its market activities, can best be interpreted in terms of the specific market and consumer variables it faces. Obviously the number of combinations of variables that are possible has made studying the constraints on strategic action related to market factors an imposing task. Steiner (1979) has summarized some of these variables: 1. Market and consumer behavior variables-- buyer needs, purchase frequencies, buyer concentration, market segmentation, market size, elasticity of demand, buyer loyalty, seasonality, cyclicality. 2. Industry structure variables--uniqueness of the product, rate of technological change in product design, type of product, number of equal products, barriers to entry, degree of product differentiation, transportation and distribution costs, price/cost structure, degree of technological change in process design, experience curves, degree of integration, economics of scale, and marginal plant size.7 Relevant to this thesis is the work of Porter (1980), who has found that exit from an industry may not be as easy as once thought. Porter found that important exit barriers from an industry can arise from structural (economic) factors; from corporate strategy, that is, the relationship between a business and other businesses an organization operates; and

7G. Steiner, "Contingency Theories of Strategy and Strategic Management", in Schendel and Hofer (eds.) Strategic Management (Boston: Little, Brown and Company, 1979), p.406. 29 from an organization's decision-making processes. 2.6 Studies On Strategic Response To Second Order Environmental Change An organization's second order environment may be defined as those elements of the environment which are remote and vague and flot directly related to the organization (Miles and Cameron, 1977). Literature aimed specifically of the subject of the second order environment is rare. Few studies have attempted to examine the strategic response of organizations which, because of fundamental change in their environment, have had to modify their domain navigation strategies, or even their choice of domain. One study which is useful, although it does not specifically deal with strategy, is that of Ackerman (1975). Ackerman studied the impact of social change on divisionalized organizations and the response of these organizations to these social issues by looking at two different social problems-- ecology and minority hiring and promotion. In summary, he found that organizations could not afford to wait until the government required compliance and issued specific first order constraints on social issues. He also found that organizations cannot avoid responding to social issues in some way, although they have some discretion as to the timing and strength of their response. Ackerman concluded that if organizations are to properly respond to social issues, a social point of view has to be built into decision-making processes. An interesting part of Ackerman's study is its identi- 30 fication of the phases of organizational involvement moving from problem recognition to organizational responsiveness: Phase 1 - Social concerns exist but are not specifically directed at the corporation. Phase 2 - Broad implications for the cor2oration become clear but enforcement Z by *societyjis weak or even nonexistent. Phase 3 - Expectations for corporate action become more specific and sanctions (governmental or otherwise) become plausible threats.8 A second study concerned with the movement of second order environmental problems into the first order environment looked at the reactions of the six largest United States tobacco firms to the growing awareness of health problems caused by cigarette smoking (Miles and Cameron, 1982). Miles and Cameron found that organizations have a considerable degree of choice at their disposai, especially when social issues are still in the second order environnent and have not yet been turned into specific legislative constraints. The "Big Six" tobacco manufacturers were found to employ a full range of adaptive strategies in responding to the health issue--reaction strategies, action strategies, and withdrawal strategies. Selznick's classic study, TVA and the Grass Roots, should also be mentioned here. This study illustrates how an organization, by coopting local agricultural forces opposed to its

8 R. Ackerman, "How Companies Respond to Social Demands", Harvard Business Review, (July/August, 1975), p.95. 31 goals, was able to adapt to a very hostile environment. By including these new forces in its policy making process, the Tennessee Valley Authority was able to adapt; yet, the TVA itself was affected because these new forces modified the organization's initial goals and subsequent strategic direction. Other sociologically oriented studies have also contributed to our knowledge of organizational adaptation. Sills (1957) has documented how an organization can change its formal goals when its initial mission is no longer appropriate, and Clark (1972) has noted how organizational myths and sagas can influence an organization's strategic direction. Clark's (1956) study of adult eduction programmes in California is also useful for this research. After analyzing the changes in these programmes over a thirty year period, Clark found that the structure of adult education programmes was forced to change because of resource pressures. During ) the period analyzed, a number of environmental factors pressured these programmes including: changes in the goals of adult education, the secondary importance of adult education relative to other types of education, and financing problems because of enrollment based funding. The overall effect of these pressures was to make adult education programmes less specialized. At a more macro level of analysis, Hirsch (1975) has compared the differences in how firms in the pharmaceutical 32 and record industries were able to adapt relative to environmental constraints. Hirsch's research revealed that the record industry was less successful than the pharmaceutical industry in coping with its environnent in a number of areas: its ability to control marketing channels, its ability to change copyright law to obtain exclusive licensing for its products, and its ability to coopt institutional gatekeepers. The research studies which are most closely related fo the subject of this research proposai are those of researchers at the University of Gothenberg, Sweden on strategy formation in crisis situations (Hedberg and Jonsson, 1977; Starbuck, Greve, Hedberg, 1978). These researchers define a crisis as a situation where unfavourable information gradually under- mines the old world image of reality as constrasted with a disaster, or sudden, type of problem situation. The Gothenberg Group defines strategy as that more or less well integrated sets of ideas and constructs through which problems are spotted and interpreted, and in the light of which actions are invented and selected. These operationalized theories of the world receive their meaning from the meta system (myth) of postulates and assumptions which constitutes theories of understanding the world (Hedberg and Jonsson, 1977). The Gothenberg Group has applied this approach to the study of Swedish Investment Development Companies, to a study of the city government of Gothenberg and to several 33 other organizations which have experienced growth stagnation. The findings of these studies have several implications for research on strategic response to environmental stagnation. Firstly, the Gothenberg researchers found that the strategy formation (or formulation) process can be distinguished from other types of planning by the interaction between rational analysis (cognition) and emotion (fantasy, will, creativity). This interaction results in discontinuities in the strategy formulation process. Secondly, the process of change of an existing metasystem seems to follow the following pattern: 1. Do the same, but more--increased reliance upon earlier growth actions and repertoires. 2. Wait out the storm--•follow efforts to reduce ail expenses which are not necessary, and to optimize behaviour in terms of performance measures based on the existing metasystem. 3. Half-hearted attempts at change -naive efforts to adapt to change. 4. New learning - development of new performance measures and new action repertoires based upon conditions of the new environment.9 2.7 Constraints On Strategic Adaptation Suggested In The Literature In Chapter I, the statement was made that we really do not know very much about what constrains organizations in

9B. Hedberg and S. Jonsson. "Strategy Formulation as a Discontinuous Process", International Studies of Management and Organization. Vol. VII (Summer, 1977), p.88-109. 34 their ability to adapt to slowly-evolving environmental changes. The literature which has just been reviewed puts forward many possible factors which might constrain an organization. Yet, we still do not know very much about which constraints will be appropriate in any given situation. Nevertheless, it is useful to summarize those constraints which have either been suggested a priori, or have been empirically determined, to restrict organizational adaptation. This list is not exhaustive, but it does give a rough framework which can be used to approach this phenomenon. As a point of departure, it is productive to distinguish between those factors which arise from inside the organization, and those factors which are external to it. 2.71 Constraints Arising From The Organization Itself 2.711 Past Decisions The literature suggests that past decisions can restrict the discretion of an organization. The mere fact that an organization has made decisions in the past, and has made choices with regard to products, or services, assets, personnel, operating procedures and other matters can pose constraints on its ability to adapt to environmental change. It seems almost a truisn; to suggest that an organization's driving forces, or the momentums created in its decision streams (Normann, 1973), are important. If an organization is in a particular domain, it seems only logical that its activities will lead it down related paths because of the tech- 35

nology it possess, the specialized training of its personnel, its competences, and its external contracts. As Chandler (1962) has noted i the decisions of an organization often create forces which continue to propel the organization long after they have been made. Structure may follow strategy; still the work of Rumelt (1974) also indicates that organizations with a certain structure may be more likely to do certain things, such as to move into international markets. Resistance to change can arise for a variety of reasons, none the least of which is the fact that uncertainty may be reduced by staying with the status quo. The vested interest that those who have participated in past decisions, or who are in an existing position of status, also seems to be important. A final effect of an organization's past decisions of its ability to adapt strategically is that the results of these decisions have led to a particular level of resources, most importantly to a particular cash flow expectation. The life cycle position of the organization, and that of its products or services, introduces important resource and growth constraints which seem to be very important in determining future strategic direction. 2.712 The Organization's Decision Processes A second set of internai constraints suggested by the literature arise out of an organization's decision processes. The main features of the social system (Guth, 1976) approach to strategy has been summarized earlier in this chapter. A 36

great deal of research and writing has been devoted to the dynamics of organizational procedures and politics, and it seems clear that these factors can constrain an organization's ability to adapt to environmental change. The fact that different coalitions exist in an organization means that negotiations, and tradeoffs, can play a part in determining strategic direction. Groups with differing goals seem to have some latitude to affect organizational decisions, through a number of devices including: the selective operalization of management decisions, the filtering and distortion of organizational communications, and the absorption of uncertainty. Standard operating procedures and organizational routines also establish important constraints. The "messy" area of what constitutes organizational power, and who possesses s it, is just beginning to receive attention; and there can be no doubt it holds many potential constraints to organizational adaptation. Clearly, the organization strategy literature shows that a "top down" view of strategic management alone is inappropiate in understanding the strategy formation process. The exclusive- ness of rationalistic adaptation has been disapproved by the empirical literature. The image, so often found, of a powerful chief executive officerand his subordinates independently plot- ting an organization's course obviously ignores many constraints on organizational adaptation. 2.713 Fixed Perceptual Frameworks Constraints on strategic adaptation can also arise 37

because managers seem to exhibit real difficulty in modify- ing the perceptual frameworks they use to monitor, and control organizational activities. Hedberg and Jonsson,and others, have pointed to the strong commitment organizational members make to the assumptions and theories they use to understand organizational realities, a commitment which can lead to great distortion in individual perceptions of events that are taking place. As Hedberg and Jonsson (1977) note, this can lead to a process which might best be described as wishful thinking. Mintzberg (1978) has also shown that relationships amongst many complex strategy variables can be thought of as a gestalt which partially explains why the strategy formation process might well be discontinuous. The literature offers many instances of how the entire gestalt, not individual components,must be disapproved and replaced before an organization is able to adapt to environmental changes. Evidence exists that perhaps the most effective way of reducing this constraint on strategic adaptation is simply the introduction of new leadership with a different perceptual framework. 2.714 Values Of Dominant Coalition A fourth major constraint on strategic adaptation arising from within the organization has been stressed by the Harvard Group of strategy writers. Although this group perceives rather few constraints on domain selection, they do argue that the values of the dominant coalition are a very important constraint 38

on strategic adaptation. Values, of course, can enter decision processes either indirectly, as a filtering device noted in the previous section, or directly as a conscious constraint ruling out strategic responses in a particular area. Unfortunately, not a great deal of research has been done on individual, or group, values as a constraint on strategic decision making. Knowledge in this area has not really progressed much beyond the findings of Guth and Taguiri (1965), who concluded that an organization's strategy is heavily influenced by the values of its leaders. One tentative hypothese cari, nevertheless, be put forward. The values of those guiding organizational direction will be a major constraint on organizational adaptation, if the distribution of power in the organization permits these leaders

• to ignore the differing values of other groups in the organization. If no one set of values has dominance, then, what will probably happen is that organizational preferences will change, given the issue t as well as the cast of individuals involved at a particular time. Recently, the increased study of organizational ideology has shown promise of more clearly identifying the role values play in constraining organizational adaptation to environmental . change. 2.72 Constraints Arising From Sources External To The Organization Organizational theorists, who take the position that arganizations are constrained in their ability to adapt to 39

environmental forces, typically devote most of their attention to constraints which are external to the organization. It is convenient to organize the major constraints discussed in the literature into three very broad categories: economic, sociocultural, and political. 2.7.2.1 Economic Constraints The consensus in the literature is that economic constraints place the most important restrictions on strategic adaptation. Ail organizations operate in an exchange system; and at the limit, organizations are constrained by their ability to obtain resources (Levine and White, 1961). As J.D. Thompson (1967) has so clearly pointed out,organizations do not enjoy complete freedom in selecting a domain. The environment must agree that an organization's mission is worth- while, if the organization is to survive. In fact, Thompson argues, organizations try to reduce environmental influences over their core technologies by sealing off these technologies, by buffering, by anticipating environmental changes which cannot be buffered, and finally by rationing resources. In a general sense, a major constraint most organizations face is that they must satisfy a particular need or preference of society; furthermore, they must do this within a further restriction that society will only allocate, or pay, a particular amount of resources, at any point in time, for an organization's output. The exact economic constraints that emerge are well known. They can arise from many factors in- 40 cluding economies of scale, cost barriers, or product differentiation. Changes in technology, or in productivity, or in society's preferences, however, if they develop can impose constraints on an organization because they upset this complex relationship involved in this exchange process. The literature is clear in showing that economic factors not only are the elements through which environmental changes manifest themselves, but they are also major elements which constrain an organization from responding to these changes in its attempt to seek a new strategic domain (Porter, 1976). If an organization cannot supply a particular need of society with a particular amount of resources, other organizations, which can, will replace it. Even organizations operating as monopolies, or through government resource allocations j are not exempt from this process. Society can always decide that it no longer wants the output of that organization, or that it wants less of it. 2.7.2.2 Sociocultural Constraints Constraints arising from sociocultural trends are difficult to define precisely. In fact, aside from the research of Ackerman and a few others, little is known about the process of how second order environmental changes get translated into specific economic, or government constraints. Mintzberg (1979), who has reviewed the way external coalitions influence organizational strategy suggests that social norms, formai constraints, pressure campaigns, direct 41 controls, and ultimately membership on the board of directors are ways that social and other demands can emerge. Ackerman's research, cited earlier, has summarized some of the social issues which have affected the operations of organization including product safety, ecological impact, occupational health and safety, equal employment opportunities, employment practices, selling and advertising practices e and consumer rights. 2.7.2.3 Political Constraints Government activities can be a very important constraint on organizational adaptation. The literature is again in agreement on this issue, noting the substantial increase in the past forty years of ail aspects of government involvement in the affairs of organizations. This interaction takes place in many different ways. The government can be a client of the organization, a supplier, a competitor, or even an owner of an organization. Additionally, the government in its various forms is also entrusted with the responsibility of establishing specific constraints on organizational actions, and exercises direct control over certain areas of organizational performance. Carruth (1973) has, through a survey of business organizations identified eight areas where government legislation constrains organizations: antitrust matters, securities and stockholders relations, consumerism, environment, fair employment practices, safety, government contracts and wage and price controls. The severity of these specific constraints on organizat- 42 ional adaptation, at any particular point in time, would appear to be a function of an organization's relations with the political party in power, and the degree to which society supports the strict imposition of social norms in various areas. For many organizations, governmental influence cornes not just through restrictions the government imposes on their organizations, but can be of a direct nature as well. This is obviously true of those organizations operating in the public sector, but it is also true of any organization that is dependent on government allocations for resources, such as universities and hospitals. 2.7.3 Critique Of Current Literature This review of the literature of organizational adaptation and strategy makes it clear that while the literature cari be used to develop lists and summaries of factors that potentially might limit strategic adaptation, it is not possible to describe for any given situation what will constrain an organization's adaptation to environmental change. Examples cari always be found for various types of organizations which invalidate general statements. A number of reasons can be put forward for the lack of good descriptive models. First, the potential constraints on adaptation e like the strategy formation process itself) include an array of potential variables which interact with each other and are extremely difficult to decipher. And in every case ) as Child has noted, the existence of strategic choice cari contaminate the findings L3 of research studies aimed at establishing relationships between environmental, technological, and structural variables. A second reason concerns the presence of internai constraints on strategic adaptation. On the whole, researchers have done an adequate job of describing the effects of economic, and direct government, constraints on strategy. However, an equally important set of constraints emerges from within the organization in its past decisions. As this chapter has indicated, an organization's past decision streams can create trajectories (driving forces, momentum), which greatly affect future direction. Consequently, a push in a particular direction will continue to propel the organization in that direction for some time as an organization goes about its affairs. It is evident that these forces will only be picked up if the researcher studies an organization over a long period of time; and few researchers have been willing, or able, to do this longitudinal research. A final reason for the failure of current organizational research to tell us about the constraints on organizational strategic adaptation concerns the need to study both the process by which environmental change develops and impacts an organization, and the process by which the organization reacts to the change. 2.8 Summary This chapter has reviewed the organizational theory literature on strategic adaptation. The critical role of the 44 concept of organization strategy to the study of organizational theory was first explored. Next the evolution of the strategy concept from a very limited use in the military sense to the neocontingency approach, which strongly emphasizes managerial choice and learning, was described. The positions of various groups of strategy writers were analyzed ranging from the strategic management group, which takes the position that a great deal of choice exists with respect to domain selection strategy, to that of the neocontingency group which argues that a great deal of latitude exists for managerial discretion with respect to both domain selection and domain navigation strategies. A list of possible internai constraints on strategic adaptation was presented including: the organization's past decisions, its decision processes, the fixed perceptual frameworks of managers, and the values of dominant coalitions. External constraints outlined include economic, sociocultural, and political factors. Finally, the complexity of the strategy concept and difficulties of doing longitudinal research were offered as reasons why research findings in this area have been limited. CHAPTER III

METHODOLOGY

The ideas that we have in research are only in part a logical product growing out of a careful weighing of evidence. We do not generally think problems through in a straight une. Often we have the experience of being immersed in a mass of con- fusing data. We study the data carefully, bringing ail ourpowers of logical analysis to bear upon them. We corne up with an idea or two. But still the data do flot fall in any coherent pattern. Then we go on living with the data - and with the people - until perhaps some chance occurrence casts a totally different light upon the data, and we begin to see a pattern that we have not seen before. This pattern is not purely an artistic creation. Once we think we see it, we must re-examine our notes and perhaps set out to gather new data in order to determine whether the pattern adequately represents the life we are observing or is simply a product of our im- agination. Logic, then, plays an important part. But I am convinced that the actual evolution of research ideas does not take place in accord with the formai statements we read on research methods. The ideas grow up in part out of our immersion in the data and out of the whole process of living. (William Foote Whyte, Street Corner Society, p.279) 3.1 Problems Of Researching Organization Strategy There cari be no doubt that the phenomenon of organizational strategy poses severe,difficult methodological problems for potential researchers. These problems arise from the complexity of the strategy concept and the difficulty of defining its content and domain. Nevertheless, unless researchers are content with findings and results derived from L6 approaches where they have been "flying blind", their methodologies must satisfy the norms of ail theory with respect to validity and reliability. The richness and complexity of the strategy phenomenon demands research methodologies,which, although perhaps not always elegant and sophisticated, are capable of capturing the rich and intricate logic of organizational strategy. As indicated in Chapter II, it appears that few researchers have had the resources, or desire, to probe this phenomenon by investing in the data gathering activities necessary to make significant statements about strategy and the strategy formation process. 3.1.1 Validity The issue of the validity of our research methodology is critical in the study of organizational strategy, and clearly is flot a simple issue with which to deal. How do we know what we are in fact describing and measuring is what we think we are describing and measuring? In looking at this subject three types of validity might be employed: content validity, criterion-related validity or predictability, and construct validity.1 Ail three of these subcomponents of validity can pose problems for strategy researchers. Content validity, or representative validity, is concerned with the issue of whether the content of what we are

1 F.N. Kerlinger, Foundations of Behavioral Research, Second Edition, (New York): Holt, Rinehart and Winston, 1973, p.457. 47 measuring is representative of the content of the universe 2 of the property being measured. For strategy research, the number of potential variables which enter into the strategy construct raises serious questions as to whether research studies can ever be representative. One of the sources of this problem is the lack of conceptual clarity concerning the strategy concept. Strategy researchers are not in agreement as to the exact nature of the strategy phenomenon; thus there is limited agreement as to what must, at a minimum, be included in the measurement, or even the description,of an organization's strategy. This lack of agreement can be identified in many ways. There seems to be little agreement concerning the level of analysis necessary to study strategy. At one level we find those who are concerned with the organization and its integration with its environment in a very broad sense. Others concentrate on the corporate level with issues very close to portfolio theory, and industrial organization. Many researchers are concerned with how within a given industry various organizations compete,in much the saine manner as marketing strategists. Finally, particularly for those who were interested in the subject of business policy during its formative years, the integretative role of strategy relative to the functional areas of business is of primary importance.

2 Ibid, p.458. 48

Other differences in defining the strategy concept can also be found. Increasingly, it is becoming apparent that for certain strategy students intention is a critical component of the construct. Others believe that strategy can only be studied by looking at, not just intention, but the actual decisions made by an organization,allowing emergent strategies to be included. Differences in approach between those who emphasize the content of strategies (usually emphasizing a much more narrow concept of strategy), and those concerned with the process of strategy formation (employing a broader concept including more social and political variables) is also evident in the literature. The critical issue then cari be summarized in the question: What variables must be included in the strategy construct if we are in fact going to describe and explain the phenomenon? Often it is difficult for quantitative research, which concentrates on one, or two, aspects of strategy, to satisfy content validity criteria given our present state of knowledge concerning strategy. For example, one cari always criticize studies based on the contents of strategy if those studies attempt to deal with causality. How cari the process of how a particular strategy developed be ignored in dealing with cause and effect. Poor market position might be a factor contributing to the decision to make a particular strategic decision, but so also is organizational politics, momentum from past decisions, changes in technology, or the 49 loss of interest of a principal decision maker and others too numerous to mention. So many variables seem important in the study of complex phenomenon that one often wonders at exactly what level of abstraction universal statements about strategy can be made. A second type of validity involves the ability of a research instrument to predict, or in general relate to, other criteria believed to measure the attribute under study. 3 This type of validity is very often more concerned with, as Kerlinger notes, some practical outcome than with the variables used as predictors. This type of validity perhaps is more useful when knowledge of a particular aubject is well developed, and a researcher is more interested in theory testing as opposed to theory building. Once again, however, the complexity of the strategy construct makes the establishment of predictability difficult. This can best be illustrated through an examination of the strategic planning performance stream of organizational research. A number of studies have been completed which show that formai strategy cari improve performance. Unfortunately, a significant number of other studies have shown that formai strategic planning does flot improve performance. When faced with this evidence,advocates of planning usually argue that

3Ibid, p.459. 50

it was the implementation of the planning systems which was inappropriate, flot the idea of planning itself. The difficulty of establishing validity in this context arises because sa many extraneous variables affect the predictors that clear outcomes are difficult ta establish. How does one control these extraneous variables ta permit prediction? Related ta this is the fact that the complexity of the phenomenon usually means, if one is ta study strategy in depth, that a rather small number of situations can be studied by the researchers. This, of course, brings into question the generalizability of the findings. This second type of validity leads us very close to a third type of validity which is extremely important--construct validation. A researcher wants to establish what factors or variables account for variance in the results of his research. ' Can the theory behind a particular measurement be validated? Cronbach (1970) has suggested that bath convergence (ail apects being measured converge or constrict) and discrimination (cari the construct be differentiated empirically from other similar constructs) are required. 5 Both of these requirements pose difficult questions for

4Ibid, p.461.

5L. Cronbach, Essentials of Psychological Testing, Third Edition, (New York: Harper and Row, 1970), p.143. 51 strategy researchers. The lack of clear organization theory (a paradigm) in the study of strategy obviously affects the ability of the strategy construct with respect to convergence. Our lack of knowledge and research about this phenomenon often leads us down many different roads which go in different directions, each with a measure of plausibility. For those interested in the larger problem of organizational change j existing knowledge can be used to support both environmental determinism and rational adaptation as explanations for organizational actions. Our efforts at exploring the nature of the entire organizational change phenomenon is so scarce that our concepts and constructs often lack discriminating ability. Numerous concepts seem important given specific contexts, assumptions, and perspectives; so much so that one is often left with a type of contingency "theory" which in essence is fundamentaly no more useful than a description of each organization as a unique case situation. 3.1.2 Reliability Reliability of a measuring instrument can be explained in many ways. It can be defined as the error of a measurement instrument, or alternatively as an answer to the question: if we repeat a research study, do we corne up with the same findings? A further approach looks at reliability in terms of 6 getting at the true properties of the phenomenon under study.

6F.N. Kerlinger, Foundation of Behavioral Research, Second Edition, p.443. 52

The problem of obtaining reliability in research studies concerned with organizational strategy are closely related to the difficulties of obtaining validity previously discussed. As with the study of any social phenomenon, a researcher attempts to map reality so that eventually an explanation for that reality cari be developed. Of course, different approaches cari be employed. Some are very quantitative using techniques which in some mariner reduce the characteristics of the phenomenon into a numerical relationship; others are qualitative, using words, descriptive relationship, and others means to explain the phenomenon. Herein lies the major problem of reliability of strategy research studies. The complex nature of the strategy construct means that for validity purposes the more interesting features of the construct should be studied through qualitative research approaches; yet, it is obviously more difficult to establish reliability in qualitative research studies. Reliability conventions, or techniques, are relatively well established for quantitative research. Sample techniques and theory have been sufficiently developed to the point that certain statements about the probability of random error distorting the results of a study cari be made. The path is relatively unobstructed for other researchers to repeat the study, or to employ the established norms of reliability when quantitative approaches are employed. With qualitative research, the problem of reliability is more severe because the 53 researcher must himself interpret his observations in order to prepare his map of the phenomenon. Thus, not only is there a problem of ascertaining whether another researcher would find the saine attributes of the phenomenon, but there is a second problem of whether a second researcher interprets the data in the saine manner. A qualitative researcher cannot pretend to let the significance of his data speak for itself! He cannot hide behind his data, but on the contrary must play with it, probe it, question it, in attempting to use it to map reality. The level of detail demanded to make significant statements about organizational strategy means that it is usually very difficult to replicate studies. If a study even attempts to cope with the very rich detail of the phenomenon, it means that it will be a one time approach, and thus arguments concerning its reliability are relatively difficult ones to settle. 3.2 Exploratory Research The purpose of this research must clearly be classified as exploratory. In fact, it could be further classified as research which attempts through the analysis of "insight stimulating" examples to obtain conceptual insight and to provide possible hypotheses for testing and further research. This classification does not, however, reduce its importance or mean that it is of inferior quality. Sellitz, Wrightsman, and Cook have noted that this type of research should not be confused with the so-called case study: 54

From these examples it should be clear that we are not describing what is sometime called the "case-study" approach, in the narrow sense of studying the records kept by social agencies or psycho-therapists, but rather the intensive study of selected instances of the phenomenon in which one is interested. The focus may be on individuals, on situations, on groups, on committees. The method of study may be the examination of existing records, it may also be unstructured interviewing or participant observation or some other approach.7 These same authors have also pointed out the main features of this approach which make it appropriate in certain research situations. First, it is an appropriate method if the intent and attitude of the researcher is to find rather than test hypotheses. Thus, it is useful in areas where knowledge and research is so limited that research activity cannot be constrained by the boundaries of existing hypotheses which need be tested. A second feature of this approach to research is its depth, or intensity. It is appropriate when one is attempting to obtain data in order to label, categorize or explain the unique features of a case under study, but also to obtain data which tells us something about other cases of the saine general nature. A final characteristic making this type of exploratory research appropriate for the study of a given phenomenon is its reliance on the ability of the researcher to be inductive, or to integrate many elements into some sort

7 Sellitz et al. Research Methods in Social Relations, Revised Edition, (New York: Henry Holt, 1959), p.98. 55 of meaningful pattern. Again it should be stressed that the objective of this research, given the present knowledge of the strategy phenomenon, is to evoke hypotheses, and in only a very general way to test existing hypotheses. Nevertheless, these comments should flot be taken as a rejection of the more sophisticated methods of data analysis: they were merely found to be inappropriate for the objectives of this study. 3.3 Research Design To summarize, this research had as its central theme the issue of how four English-oriented organizations strategically changed in response to changes in their environment which affected their traditional clients, their resource bases, and their rates of growth. The changing social environment of the period of 1960 to 1975 which these organizations faced provided an excellent opportunity to study the strategic change process and the forces which constrain the ability of an organization to alter its strategic direction. Figure 1 outlines a simple model of the basic phenomenon which were dealt with in completing this research. As cari be seen in this exhibit, data had to be gathered on a number of issues to truly appreciate and understand the strategic responses of each of these oganizations. These issues included: the nature of the social changes which took place in the social, political, and economic direction of Quebec during the 1960's, the mariner in which these changes evolved until they finally RESEARCH MODEL

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init ial strategy g o f o rganization 56 57 had impact upon the organization, the strategies of the organization under study throughout the period of analysis, and finally the process by which strategy changed in each organization. 3.3.1 Definition Of Terms Ta look at these issues a number of terms have ta be defined. The following is a partial list of some of the more important concepts operationalized in this research: Strategy - is defined as a pattern in a stream of decisions (Mintzberg, 1978). Domain definition strategy - refers to the organization's choice of domain or change of domain that occurs when, for example, a firm diversifies into or exits from particular products or markets (Bourgeois, 1980). Domain navigation strategy refers ta the competitive decisions made within a particular product market (e.g.) industry or task environment (Bourgeois, 1980). Environment - the external set of forces ta which an organization must respond (Miles and Snow, 1978). First order environnent - an organization's customers (distributors and users), suppliers (of materials, labor, equipment, capital and workspacel competitors (for bath markets and 58

resources), and regulatory groups (government agencies, unions, and inter- firm associations--Dili, 1958). Second order environment - elements of the environment which are more remote and not frequently in contact with the formai organization (Miles and Cameron, 1977; Emery and Trist, 1957; Dili, 1958; Terreberry, 1968,e.g.). 3.3.2 Unit Of Analysis This research deals with four English-oriented organizations in the Eastern Townships of Quebec, and the strategies these organizations employed in the period, 1946 to 1976. It should be noted that the unit of analysis of this research was the strategies of these organizations (both domain definition and domain navigation). This research did not attempt to examine, or describe in detail ail of the elements which make up these organizations; but rather concentrated on their strategies, structures, and performance. Chapter I of this thesis noted the reasons for the selection of these organizations; their situation in a slow- ing evolving environment presumably requiring some strategic change, their importance to the English-speaking community, their accessibility to the research because of the existence of public documents. Two issues concerning these organizations deserves special attention. The first concerns the differences which 59

exists amongst them and whether these differences invalidate the study. How cari common conclusions be drawn from such a diverse group of organizations with different profit orient- ations, technologies, power distributions, and structures? Similarly, although ail of these organizations are relatively small, their sizes do differ substantially ranging from thirteen employees to over three hundred employees. The answer to this question cari be found in both the present state of knowledge concerning the strategy construct, and the objective of this study which was to generate hypotheses for future work. It was not the intent of this study to prove unequivocally that certain relationships existed, but rather to attempt to clarify and determine those areas which, in future research, must be looked at in depth. Thus, a situation involving different types of organizations with different critical variables was thought to be useful. Nevertheless, it should also be pointed out that the selection of two profit- oriented organizations and two not-for-profit organizations, facing similar general environment changes, did allow for some preliminary comparisons to be made. A second response to this question is that the various differences between the organizations had to be dealt with explicitly, and openly, taken into account before any conclusions could be drawn. This, it is felt, increases the validity of this study. Furthermore, if the level of abstraction of the concepts of this research are examined ) it is clear 60 that these differences forced the probing of the concept of strategy at a higher level: a level common to ail the organizations. This saine level of abstraction was applied to the analysis of the process by which social change impacted each of the organizations studied. Finally, the point cari also be made that the four organizations studied in this research do share a number of common characteristics; ail were in a declining environment, ail dealt with the anglophone population of the Eastern Town- ships as one their major client group; ah l were small in size relative to organizations offering similar services. This last characteristic allows us to look at the critical issue of the meaning of strategic choice for smaller organizations. A second issue concerning this research also deserves attention. Why was the period 1946 to 1976 selected as the focal period of this research? Earlier this thesis noted the necessity of longitudinal research in the study of organizational strategy because of the richness and complexity of the strategy phenomenon; there is no other methodology that cari pick up the effects of the momentum of past decisions involving amongst other factors technology and organization structure, in the process of strategic change. The issue then is how far back into the past should one go, and at what point should one stop as one approaches the present. A period of thirty years was selected, placing the starting data for this study at the year 1946. It was decided that this would be a sufficient period of time to examine the strategies of each of 61 these organizations prior to the changes of the Quiet

Revolution. Additionally, it was felt that the period 1939 to 1945 was an abnormal period for these organizations because of World War II. At the other extreme, the year 1976 was selected because of the election of the Parti Quebecois on November 15th of that year; it was felt that the 1976 election of the Parti Quebecois Government greatly accelerated the pace of socio-political change facing anglophone institutions. In other words, it is not clear that these organizations were still in a slowly evolving environment. 3.3.3 Data Collection And Analysis The McGill approach to the study of the strategy formation process entails a number of steps. The first step involves the determination, in a rather rough fashion, of the decision areas which are important to an organization, and the development of a chronological listing of the important decisions made by the organization over the period to be studied. In addition, a chronological listing of key events and trends which took place in the organizations specific and general environments is made. The key point for this stage of the data collection is that the approach concentrates on a search for tangible evidence and is not concerned with the perceptions of those who were associated with the organization. Normally, this stage involves the search for in-house and published, documents and some interviewing geared towards the obtaining of facts about the organization and its decision 62

streams. In this research the following sources were used to develop the decision chronologies: 1) The Sherbrooke Hospital - annual reports, minutes of the Medical Executive Committee, newspaper articles and press releases, financial statements, certain organizational files, external documents concerning health care institutions in the Eastern Townships. 2) The Sherbrooke Record - analysis of 2,500 editions of the newspaper including the entire period of 1967 to 1976 and a sample of the month of October (1946 to 1966),published articles about the paper and its principals, Canadian Advertising:Rates and Data 1946 to 1976. 3) CKTS Radio - Analysis of CRTC files in Ottawa, certain B.B.M. reports, Canadian Advertising:Rates and Data, newspaper articles on the station. 4) Bishop's University - minutes of the Senate, Faculty, Corporation and Executive Committee 1946 to 1976, ail issues of the student newspaper The Campus 1944 to 1976, internal planning documents. Particularly, in the case of CKTS Radio and The Sherbrooke Record interviews also provided factual information about these organizat ions. Inference of the strategies and the strategic period of an organization from the chronological listings is the second step in the McGill approach. This step presented no special problem in this research and will be presented, and explained, later. The third step of the McGill approach is the intensive analysis of the specific periods of change in the organization's strategy. Increased detail is sought especially through .the process of interviewing those familar with an organization. 63

Most of the interviews completed for this research ) particularly in the case of Bishop's University and The Sherbrooke Hospital ) were conducted during this stage. This research) having very specific objectives ) concentrated on the analysis of three phenomenon. Similar to other strategy studies which have been completed employing the McGill approach, it was concerned with the process by which strategy changed. However, special emphasis was also given to two other issues: the process of environmental impact, and the interrelationship of constraints on strategic adaptation. 3•3•4 Critiques Of The McGill Approach Certain criticisms have been made about the McGill approach by some students of organizations. One is that this approach merely permits the construction of organizational histories, and does not tell us very much about how ta improve organizational performance. In more methodological terms this argument implies that these studies lack validity because their domain of applicability is limited; that is, they merely describe what the strategies of one organization were, and do not show other organizations what should be done. This criticism cari be questioned because it appears ta be based on a misplaced, or limited, view of strategy research: a view that suggests that research on strategy should only be concerned with issues which will directly improve the performance of organizations. This view is limited in that the argument that detailed )longitudinal research will lead ta more complete understanding of strategy sooner cari always be made. 64

It also might be argued that this type of research cannot be significant because the methodology is not sophisticated and is inelegant. Mintzberg (1979) has answered this question by noting that the direct approach to strategy and other organizational phenomenon is particularly well suited to our present knowledge in this area. To reject this approach because it is concerned with descriptive theory, which must be developed before normative theory can be advanced, seems unjustified. The second criticism of the McGill approach is that the concept of strategy it employs downplays, or even ignores the intentions of strategy makers, or key actors in the organizations studied. This argument, in its fullest form, is based on the premise that a concept of strategy which is not primarily concerned with the intention of key individuals risks missing the logic behind the actions of these individuals, and these actions are a strong influence on how strategy is formed in any organization. Admittedly, this can be a problem, especially when one begins investigating incidents going back beyond five or ten years in an organization's past. The alternative is to concentrate on researching current strategic situations and current decision making. Here again, however, one can see that it is possible to miss critical points of the actor's logic because organizational momentum is not identified, or because the decision makers make defensive, self-serving responses to the researcher's questions to protect themselves. The McGill methodology builds on the actual decisions which have been 65 made by individuals in an organization, and does not completely ignore intention--it is just that it does flot critically depend on the intention of decision makers to explain strategic changes. The McGill approach to the study of strategy formation allows different types of variables to enter the strategy formation model because a concept of strategy based solely on intention is unresearchable--it cari never be validated (Mintzberg, 1976). 3.4 Specific Problems Of This Research By far the most critical difficulty of this research study was the level of detail demanded by the McGill approach. The complexity and richness of the strategy concept requires detailed information on the decisi6ns of an organization: a requirement that involves a good deal of time and effort. Compounding this difficulty was the fact that four organizations were involved, and very little systematic research had been completed on any of these organizations. In essence what this meant was that the researcher had to become an "expert" on the decisions of each organization even though his primary interest was in using specific parts of the data accumulated to generate hypotheses on strategic management and environmental change. Related to this difficulty is the fact that this data collection process could theoretically go on forever as one progressively develops a better map of the reality of these organizations. At what point does the researcher know that he has enough data to get a valid picture of reality 66 so that possible explanations for that reality can be developed? A second problem involved the establishment of reliability. It is very difficult not to be swayed, or influenced, by the perceptions of those involved in an organization. This bias can affect the processes by which the data is analyzed, but also the data that is actually gathered. Issues such as consistency in the way interviews were carried out, and bias because of a researcher's own perception, are always present. In qualitative research such as this the basic safe- guard ta insure high reliability is ta be critical of one's own work, and to try and establish some validation of inferences developed. Specifically, certain actions were undertaken ta increase the reliability and validity of this study: Different sources of information were used ta check the facts concerning decisions, particularly when individuals and not tangible traces were the source of information concerning a particular organizational event. 2) When results of analysis suggested an inference in a particular direction, additional data was sought t either support or refute what was being suggested. 3) People knowledgeable about a particular organization were asked ta comment on hypotheses about that organization. 4) Questions such as, what else ought ta be true if a given hypothesis is valid, were asked and investigated. 67

These actions were particularly important in the case of Bishop's University because of the researcher's association with that institution, and resulted in even more data being gathered on Bishop's University to insure that the researcher's inferences were not greatly biased. One of the major difficulties of researching organizations is obviously gaining the trust of individuals who have been, or who are associated with that organization--again a question of reliability. This was critical in this research because for many anglophones in Quebec the subject of the survival, and welfare, of English institutions is certainly a sensitive issue. Another problem of this research concerned the analysis of the data gathered. While the McGill approach provided a systematic way to gather the data, it was not quite as easy to develop a systematic way to interpret and analyze the data gathered. Furthermore, as with ah l qualitative research that takes effort to gather the data there was a tendency to have data gathering drive out data analysis. The imprecision of existing strategy terminology added to the difficulties of analysis. 3.5 Summary This chapter has outlined in general the problems of researching a complex phenomenon such as organizational strategy, and the methodology specifically used in this research. The necessity of using a methodology which captures 68

the richness and complexity of organizational strategy was shown to cause difficulties in establishing the validity of the research findings. In particular, the lack of agreement over what constitutes the strategy concept complicated the issue. The lack of reliability conventions for qualitative research was then discussed followed by descriptions of the design of this research, its unit of analysis, and the McGill approach to data collection and analysis. Finally, the specific problems of this research including the level of detail demanded, and difficulties of establishing reliability because of the impossibility of replicating the findings were presented. CHAPTER IV

THE SHARED ENVIRONMENT

4.1 Introduction And Purpose The objective of this chapter is to bring together some of the environmental factors in the general environment which each of these organizations share, given that they are ail institutions which have historically served an English- speaking clientele, and that they are ail situated in the Eastern Townships of Quebec. Specifically, three areas are presented: 1) the demographics of the English-speaking population, 1946 to 1976, (2) a description of certain characteristics of the Eastern Townships in comparison with other areas of Quebec, and (3) a description of some of the more important socio-political trends and events which transpired in Quebec during the period from 1946 to 1976, in particular an outline of those social changes which have corne to be known as the Quiet Revolution. It should be noted that it is not the intent of this chapter to analyze or explain the root causes of these changes. This would be beyond the scope of this study and would require a different type of approach and methodology. Rather, the objective is to describe certain events and trends which are important in attempting to understand the forces that each of 70 the focal organizations had to cope with during the 1946 to 1976 period, and to understand how these environmental changes eventually had impact on each organization. 4.2 The Demographics Of The English-speaking Population Of The Eastern Townships In analyzing the demographics of the English-speaking population of the Eastern Townships, a necessary first step is to define exactly which region is being dealt with in this study. The historical Eastern Townships consists of eleven counties: Arthabaska, Drummond, Wolfe, Megantic, Frontenac, Richmond, Shefford, Sherbrooke, Compton, Brome and Stanstead. However, the Quebec government, in defining the administrative region known as the Eastern Townships (now l'Estrie) uses parts of only six counties: Sherbrooke, Stanstead, Richmond, Wolfe, Compton, and Frontenac. For the purpose of this study--to study the potential markets for the anglophone institutions serving the Sherbrooke area--another modification must be used. This study is concerned with all of the region close to the Eastern Townships, in either an administrative, or an historical sense, which might in certain cases be served by Sherbrooke area organizations (Bishop's University, of course, is not as restricted in terms of potential market). Thus, parts of Mississquoi County which, to a certain extent, identify with the Eastern Townships must also be included. Cowansville and Bedford are notable examples of towns in this category. One study which has specifically dealt with the •

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population changes of English-speaking Quebec is, A Demo- graphic Profile of the English-speaking Population of Quebec: 1921-1971, by Gary Caldwell. Caldwell notes that between 1941 and 1971 the English-speaking population of the historical Eastern Townships (eleven counties) dropped from 46,228 (1941) to 44,690 (1971). Caldwell also notes that for the administrative region of the Townships this decline has been similar, from 30,627 in 1941 to 28,720 in 1971. Information from the 1976 partial census indicates that the trend Caldwell found continued during the 1971 to 1976 period. The 1976 Census shows the total number of English- speaking individuals in the historical Eastern Townships to be 43,160, and to be approximately 27,200 in the administrative region of the Eastern Townships. More importantly, the English-speaking population as a percentage of the total population of the area, and as a percentage of the total population of Quebec hwe both declined. Figure 2 presents this data for the administrative region of the Eastern Town- ships, and adds information from the 1976 partial census. There are six counties in the immediate area of Sherbrooke with important English-speaking communities. Table 1 presents these counties with the approximate numerical size of their English-speaking populations. These figures indicate the relative stability to moderate decline of the English-speaking population in absolute numbers. Ex- cept for Brome and Mississquoi counties :the number of 72

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TABLE 1 SIZE OF THE ENGLISH-SPEAKING POPULATION BY COUNTY 1941-1976 - 1941 1951 1961 1971 1976 Sherbrooke 10,113 11,199 11,344 11,490 10,500 Brome 6,834 6,984 7,175 8,220 8,015 Stanstead 8,575 8,537 8,318 8,165 7,665 Compton 6,009 5,391 4,912 4,310 4,005 Shefford 3,900 4,372 4,935 4,860 4,550 Richmond 4,884 5,277 5,33? 4,855 4,330 Mississquoi 5,927 5,699 6,328 6,790 6,985

SOURCES; G. Caldwell, A Demongraphic Profile of the English- speaking Population of Canada, CIRB, 1974. Census of Canada, 1941, 1951, 1961, 1971, 1976.

English-speaking people remained either relatively stable, or declined moderately, in each of these counties. The inclusion of Mississquoi county in the group lessens the impact in the decline of the total English-speaking population in the region (declining from 46,242, 1941 to 46,050, 1976). Considered relative to the French-speaking population, the English-speaking population has declined in importance in ail of these counties. This fact is revealed in Figure 3 which shows the English-speaking population as a percentage of the total regional population for those counties in the Eastern Townships with a substantial English-speaking population. A number of conclusions can be drawn from this demographic profile. The first is that no matter how one defines the 74

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Eastern Townships the absolute number of English-speaking citizens declined during the thirty year period of study of this research. This decline measured as a percentage of the 1951 English population (1951-1976) ranges from 8 percent for the historical townships, 13.4 percent for the administrative region of the Eastern Townships, and 1 percent for the important proximate English-speaking counties of the Townships. A second point, then, must also be stressed. A size- able English-speaking population existed in the Eastern Town- ships during the period of this study. In 1976, the Sherbrooke Census Division still had over 10,000 individuals whose mother tongue was English, and in absolute numbers over 40,000 English-speaking individuals lived in this area in 1.976: 40,000 individuals who might be served by a Sherbrooke based organization l depending on the service. Third, the English-speaking populàtion of the region has not kept pace with the growth of the French-speaking population; and thus has declined in relative importance both as a percentage of the total population of Quebec, and as a percentage of the total regional population. Finally, the decline of the English-speaking population has taken place in the more easterly sections of this region, with the counties closer to Montreal--Brome, Mississquoi, and Shefford, actually experiencing increases in the numeric size of their English-speaking population since 1951. Brome County 76 for example, had over a 20 percent increase in the size of its English-speaking population during the 1941 to 1971 period. 4.3 The Eastern Townships Region In attempting to describe the Eastern Townships as a region again great care must be taken to define exactly what area is being discussed. One profile which has been completed is that of the Office de planification et de development du Québec l which deals with Administration Region 05--1'Estrie-- utilizing census regions for the following six counties: Compton, Frontenac, Richmond, Sherbrooke, Stanstead and Wolfe. While the definition of the Eastern Townships/l'Estrie is again different, and the study deals primarily with the 1961 to 1971 period, for the purpose of this study it is still quite useful. 4.3.1 Importance Of The Region The first fact which is important in understanding the region defined above is that its population makes up a relatively small percentage of the total Quebec population and has been declining in relative importance. Table 2 shows the percentage of the total Quebec population in these six census divisions for five different census periods. The regional profile indicates the major reasons for

10ffice de planification et de development du Québec, Caractéristiques sectorielles interégionales, (Quebec, 1976). 77

TABLE 2 PERCENTAGE OF QUEBEC POPULATION IN ADMINISTRATIVE REGION - 05 1951 to 1976

POPULATION REGIONAL POPULATION X 1 REGION 05 QUEBEC POPULATION TOTAL QUEBEC POPULAT- ION 1951 203,652 4,055,681 5.02 1956 219,792 4,628,378 4.75 1961 236,162 5,259,211 4.41 1971 243,637 6,027,765 4.04 1976 248,200 6,234,445 3.98

SOURCE: Annuaire de Quebec, Various Years Census of Canada, 1976. this decline: the region although it has grown, has not kept pace with the growth of the Quebec population (the growth rate of Quebec population, 1961 to 1971 was 14.6 percent; for l'Estrie it was 4.9 percent). The profile also indicates that the net migratory balance was minus 20,249 indicating that more people left the area then entered during the 1961 to 1971 period. This coupled with the low birth rate explains the small increase in the population during the 1960's. 2 Table 3 shows the percentage of inhabitants that were living in urban areas for census from 1951 - to 1976. In 1976 the level of the urban population of the region was 65.5

2 Ibid, Cahier 1, p.43. 78

TABLE 3 % URBANIZATION IN ADMINISTRATIVE REGION 05 1951 to 1976

URBAN POPULATION TOTAL POPULATION URBAN POPULATION PERCENTAGE

1951 116,556 203,652 57.2

1956 130,884 219,792 59.5

1961 144,295 236,162 61.0

1971 157,145 243,637 64.5

1976 162,675 248,200 65.5

SOURCE; Annuaire de Quebec, Various Years Census of Canada, 1976 percent, and as the regional profile indicates, this in comparison with the province as a whole represented one of the weakest growth rates in urbanization in the province (1961 - 1971 growth of urban population Quebec - 24.8 percent; l'Estrie - 8.9 percent) exceeding only that of the Saguenay-Lac St. Jean region. It should also be noted that l'Estrie has the third largest anglophone population in the province (after Montreal and Outaouais) both in ternis of absolute numbers and the size of the anglophone population relative to the total regional population. 4.3.2 Economic Structure Very little research has been completed on the pre-1960 economic structure of the Eastern Townships. One exception 79

ta this statement is the study of Michel Phlipponneau 3 completed for the Quebec Ministry of Industry and Commerce in 1960, using the 1951 census data. Table 4 reproduces some of Phlipponneau's work showing the underrepresentation of tertiary industries, and the overrepresentation of primary activities (agriculture, forestry, fishing and hunting) in the activities of the active labour force in the eleven counties of the historical Eastern Townships in comparison with other areas. TABLE 4 HISTORICAL EASTERN TOWNSHIPS STRUCTURE OF THE ACTIVE LABOUR FORCE (%) 1951 CENSUS

EASTERN QUEBEC 'TOWNSHIPS QUEBEC OUTSIDE CANADA U.S.A. FRANCE MONTREAL

1. Agriculture, Forestry and Hunting 24.8 17.1 27.4 17 12 27 2. Mines, Manufacturing, Construction 45 39.9 37.5 36 36 36 3. Transportat- ion, Finance Commerce Ser- vices 28.3 41.5 35.1 47 52 37

SOURCE: M. Phlipponneau, L'avenir économique et social des canton de l'est, • • • p. ransae yuor.

3M. Phlipponneau, L'avenir économique et social des cantons de l'est, (Quebec mis ry o n us ry an ommerce, 1960). 80

The regional profile shows that, although by 1971 the structure of economic activities, as indicated by employment, had shifted away from primary activities and that tertiary industries had grown in importance; primary industries still remained relatively more important and tertiary industries were still less important in comparison with other areas of Quebec. Table 5 reproduces these findings. TABLE 5 L'ESTRIE (SIX CENSUS COUNTIES) STRUCTURE OF THE ACTIVE LABOUR FORCE (%)

1 9 6 1 REGIONS PRIMARY SECONDARY TERTIARY Quebec 18.2 25.0 56.8 Mauricie-Bois-Francs 18.0 39.5 42.5 Estrie 19.6 36.3 44.1 Montreal 4.3 39.5 56.2 Outaouais 15.8 27.9 56.3 Le Quebec 11.8 34.5 53.7

1 9 7 1

REGIONS PRIMARY SECONDARY TERTIARY Quebec 9.2 24.0 66.8 Mauricie-Bois-Francs 9.6 38.9 51.5 Estrie 12.1 35.0 52.9 Montreal 2.5 34.4 63.1 Outaouais 7.4 24.2 68.4 Le Quebec 6.2 31.7 62.1

SOURCE: OPDQ, Caractéristiques sectorielles interrégionales, Quebec 1976, Cahier 1, p.64. 81

Measures of specialization indicate the economic activity of the region is well distributed amongst many activities, although five activities show a percentage greater than what can be found in the structure of activities of the work force of Quebec as a whole: mining, agriculture, industrial manufacturing, forestry, and services. The regional profile also shows that despite the overrepresentation of primary industries and the underrepresentation of tertiary activities, the two most important industries or activities in ternis of employment were services and industrial manufacturing. Within manufacturing, textiles, clothing, rubber, plastics and paper products were the most important areas of activity. Importantly, the coefficient of structural transformation indicates that only small modifications in the structure of the activities of the active labour force occurred between 1961 and 1971. 4 Certain other characteristics of l'Estrie are also important in understanding the region. The regional profile indicates the region has a very high number of retail estab- lishments per capita, thus sales per outlet are relatively small in comparison with other areas of the province. In ternis of the importance of this area in the province, commercial sales represent about 3.2 percent of the provincial total and did not change much over the 1966 to 1974 period. 5

4Office de planification et development du Québec, p.71-72. 5Ibid, p.71 and 72. 82

L'Estrie has traditionally been an area of relatively low unemployment compared to the balance of the province, and the regional profile indicates that this was the case both in terms of both the 1961 and 1971 Census. However, transfer payments (welfare, old age pensions, unemployment insurance, post-secondary education grants, family allowances, and grants to non-profit institutions) in l'Estrie made up a higher percentage of total personal revenue than in any other part of the province. The regional profile indicates that the structure of the population with an overrepresentation of university level students and pensioners is one explanation for this difference. Per capita personal revenue has shown a tendency to be below the provincial average,although during the 1961 to 1971 period this gap was reduced. 6 Finally, in ternis of education and hospital services the region is extremely well-equipped. With two universities and a number of CEGEPS, the region attracts students from outside areas. Also, in ternis of medical personnel per capita, and surgical and medical beds per capita, the region has one of the highest ratios in Quebec. 4.4 The Quiet Revolution 4.4.1 Introduction The Quiet Revolution is the naine which has been given

6Ibid, pages 99, 100, 101, and 103. 8 3

to a period of important changes and reforms in Quebec roughly starting about 1959 or 1960. A complete analysis of a complex period of social change such as that of the Quiet Revolution obviously cannot be given in a few pages. Yet, it is nevertheless important to describe in a very general way the mood of the province during the period of this study, if the strategies of anglophone institutions are to be under- stood. Ail four of the focal organizations of this study were affected by events of the Quiet Revolution; thus, this analysis will attempt to bring together in a coherent fashion a number of events and trends to provide a framework to interpret the decision streams outlined in this research. A number of factors precipitated the changes of the Quiet Revolution including:the rise of independent Catholic trade unions such as the Confederation of Catholic Workers of Canada; the criticism of the province's social order by the Quebec intelligentsia in journals such as Cité Libre, and in newspapers, especially Le Devoir; the growth of younger, rest- less elements within the Roman Catholic Church; and the development of a bureaucratic (lay) class within the province's social and political institutions. Specific antecedents of the Quiet Revolution can be found in the Asbestos Strike of 1949, and the publication of Le chrétien et les élections by Abbes Dion and O'Neil in 1956. Around 1959, however, a number of events transpired to justify the designation of that year as the start of a period 84

of comprehensive reform and change in the province's social order. These events included the bitter Radio Canada pro- ducer's strike starting December 28, 1958, and lasting until March 7, 1959; this was a strike which, for many, pitted the English-speaking management of the CBC against the French- speaking producers. Another event was the action of Alberta's Cameron Commission on Education which reported in November, 1959 that there was too much French in Alberta's schools. Emotions were also stirred by celebrations marking the two hundredth anniversary of the Battle of the Plains of Abraham (and the English conquest) in September, 1959. On an intel- lectual front, Les insolences du Frère Untel was published following letters in Le Devoir (November, 1959). This book criticized the use of "joual" and the desecration of the French language in Quebec and Canada. Finally, and most significantly, an event which gave great impetus to momentum for change was the death of Premier Maurice Duplessis who had served as Premier of Quebec for sixteen years, on Sept- ember 7, 1959. While a detailed investigation of the root causes of the Quiet Revolution is beyond the scope of this study, some general points can be made. The first is that it is clear that the Quiet Revolution came about because of the dissatisfaction of many French-speaking citizens of Quebec with the existing social order, and their position in that order. Richard Jones has written that one of the major themes which 8 .5 emerges from this period was the realization of French- speaking citizens of Quebec of the need ta take contrai of their own situation; specifically the need for a comprehensive programme of reforms if they were ta improve their inferior status bath within the Province of Quebec, and secondly, within Canada as a whole. 7 Behind this inferior status was, of course, the process by which industrialization and urbanization had affected Quebec society. As Fernand Ouellet noted: ...the Province of Quebec had gradually came to realize its precarious position in the midst of industrialization. This newly gained awareness dictated a reappraisal of ail the old traditional standards in the various political, social, religious, and educational fields. The survey was not limited ta the past only; an in- ventory was also made of modern requirements. Nationalism was not, as previously, used as the sole yardstick for such a revision; a greater variety of solutions could be derived from other patterns. Originally banded together against the Union Nationale establishment, the opposition also began ta point its guns at the ruling classes. Duplessis's disappearance made way for a series of reforms which the Liberal party's coming to power multiplied. Attention was focused on education, hospital insurance, political and administrative reform, and the like.8 The dissatisfaction of many French-speaking Quebecers cari be illustrated with a number of examples. Hubert Guidon

7 Richard Jones, Community in Crisis, (Toronto: McClelland and Stewart, 1972) 8Fernand Ouellet, "The Historical Background of Separat- ion in Quebec", first published in Liberté, IV, No. 21, March 1962, in R. Cook (ed.), French Canadian Nationalism, (Toronto: Macmillan Company, 1969), p.63. 86 has argued that one source of dissatisfaction, prior to 1960, was the fact that changes in the elite of the province had flot kept pace with changes brought about because of industrialization; in fact, the role of the clergy had not diminished between 1900 and 1950, but had expanded. The new middle class (he calls it the bureaucratic class) found itself in a position where it was not part of the power bargain which had been forged between the Church, the politicians (notably Premier Duplessis), and economic interests. Guidon basically argues that the openness of this political bargain, and the increasing distaste of the new bureaucratic class for this type of politics, were prime reasons for the changes which were to follow during the Quiet Revolution. 9 Noteworthy, for the purposes of this study was the fact that the anglophone community, on the whole, seemed quite comfortable with the status quo; it, indeed, was quite content with the political rules of the gaine and the power balance it entailed. Premier Duplessis, while adamant in stressing a political nationalism for Quebec in dealings with the federal government, nevertheless, practised a form of laissez-faire economic liberalism which welcomed foreign capital and which permitted exploration of the province's vast amount of natural resources.

9Hubert Guidon, "The Social Evolution of Quebec Re- considered", The Canadian Journal of Economics and Political Science, XXVI (November, 1960), p.533-51. 87

A second source of dissatisfaction was the inferior economic position of the province's French-speaking population. The English language clearly dominated many segments of life in Quebec,ee.g.ecially communications, business, and technology. In terms of employment, French-speaking Quebecers tended to work in professions and services serving their own population, at lower level of corporate concerns (the majority), and for certain bilingual individuals, in positions where a knowledge of English was essential. 10 Dofny and Rioux have noted the overrepresentation of English-speaking individuals at the upper levels of management: On the whole, according to the 1951 census, in the category of "owners and directors" there is an over-representation of English Canadians, in comparison with French Canadians; the figures for these two groups are 12.3 and 7.1 percent respectively, the average for those of ail origins in this category being 8.6 percent. As for the administrators of these modern industries, they are more often English than French. In the city of Montreal, where the French Canadians form the large majority of the population, one notices from the census of 1951 that the category of engineers (civil, electrical, mechanical, and mining) includes 2,726 persons of whom 1,296 are English Canad- jans and 895 French Canadians.11

10E. Jacques Brazeau, "Language Differences and Occupat- ional Experiences", The Canadian Journal of Economics and Political Science, XXIV, 4 (November, 1958), p.532-40.

11J. Dofny and M. Rioux, "Social Class in French Canada", Revue française de sociologie, (July-Sept. 1962), in M. Rioux and Y. Martin (eds.). French Canadian Society, Vol. 1, (Ottawa: The Carleton Library, 1964), p.314. 88

Not only was the status of francophones inferior within Quebec, but the province itself fared poorly in comparison with the rest of Canada, suffering from higher than average unemployment and lower than average wage levels. Contributing to this state of affairs was the francophone education system of the province which was structured in such a way that, while a very small elite in the province received a strong education, over 50 percent of children entering Grade 1 (before 1960) in the Catholic system did flot reach Grade 7• 12 English-speaking students in the province attending the Protestant system enjoyed an integrated system of primary and secondary schools leading to one of the province's three English-speaking Universities. In comparison, francophone students suffered from a disorganized and inadequate system which made it difficult to proceed to the secondary level, or to one of the private college classique for university preparation. A third source of dissatisfaction was the status of the French language, and the status of French-speaking individuals, in the Canadian federal system. Francophones living outside of Quebec were subject to rapid assimilation into the English culture, and to unsympathetic provincial governments (particularly with respect to French-language education). Even in

12Arthur Tremblay, ROyal Commission of Inquiry on Con- stitutional Problems, Appendix 4, (Quebec: Government of Quebec, 1956), p.36. 89 the Federal Civil Service did the francophone find himself at a disadvantage. For example, John Porter, writing in 1962, noted that only 27 or 13.4 percent of the 202 people in the highest positions of public administration in Canada were French Canadians. 13 Similarly, another study found that of the top 1,084 civil servants in Canada only 12.6 percent 14 were French Canadians. Related to this is Porter's 1961 study of the economic elite of Canada which found that only 51 (6.7 percent) of the 760 individuals identified, as being in the economic elite of the country, to be French Canadian. 15 Illustrative of this state of affairs was the board of Canadian National Railways where not one of the seventeen directors of the publicly owned corporation was French Canadian: a situation which eventually) in 1962, would become a cause celebre. Another illustration was the fact that it was not until 1962 that federal cheques for various payments to Quebec citizens became bilingual. It is clear that many French-speaking Canadians found the federal structure just another example of English dominance.

1 3-John Porter, "Higher Public Servants and the Bureau- cratic Elite in Canada", The Canadian Journal of Economics and Political Science, XXIV (November 1958), p.491.

14Le Devoir, November 30, 1962.

15John Porter, "The Economic Elite and the Social Structure in Canada", in B.R. Blishen et al (eds.) Canadian Society, (Toronto: Macmillan Co. of Canada, 1961), p.486-500. 90

One point should be noted with respect to the situation of the French language within the Canadian federal system. Although for the purposes of this study aspects of the Quiet Revolution which evolved within the province of Quebec are paramount, another set of developments also took place with respect to changes in the status of the French language in the Canadian federal system. Starting with the 1964 Royal Commission on Bilingualism and Biculturalism, and later closely identified with the leadership of Pierre Trudeau, this "movement" has sought to revise the federal ystem and its operations to emphasize bilingualism with the aim of making the system more acceptable to French Canadians. In many ways this approach has developed as a competing alternative to those who would correct the dissatisfactions of francophones through actions of the Government of Quebec. The changes that emerged during the Quiet Revolution cari be structured along the lines of three major themes. The first is the growth of government intervention in a number of areas of Quebec life--education, economics, social affairs, cultural affairs--as the government replaced the Roman Catholic Church as the key influence in the lives of the francophone citizens of the province. A second theme is the increased economic and political nationalism which arose in Quebec for a variety of reasons including the dissatisfactions outlined in this paper. A final theme which gives structure to this description of the Quiet Revolution is the development of social 91 protest, and social unrest, which was characteristic of Quebec during this period. 4.4.2 Government Intervention 4.4.2.1 Education The reform of education certainly represents one of the key interventions of the provincial government during the Quiet Revolution. Prior to 1960, the francophone education system in the province was in a very poor state. Fragmented and incoherent the system compared very unfavourably to other educational systems in North America, and was not well suited to the demands of an industrialized society. In the spring of 1961, the Lesage Government announced 16 a Royal Commission of Inquiry in Education. Also, in 1961, a number of laws, which have corne to be known as the "Grande Charte" of education, were passed. The fundamental principle behind these laws was the right of ah l children in Quebec, given their abiIity, to a free education no matter where they lived in the province. Thus, school commissions were required to teach up to Grade 11, the school leaving age was raised to fifteen years, grants for secondary education and school transportation were established, and new regional school commissions were set up. At the university level, a seven year plan to finance

16The information from which this description of events has been developed was taken from a number of sources specifically Canadian New Facts, Annuaire du Québec (various editions), Canada Yearbook (various editions). 92

and develop the province's universities was put into effect including a system of "perfectionment" ta upgrade teaching faculties. No doubt the settling of the federal/provincial dispute over federal funds for higher education(in February, 1960) assisted in the process of financing these changes. Between 1963 and 1967, the Parent Royal Commission issued a number of reports. One of the most significant recommendations which was implemented was the creation of new administrative structures for education in the province. In May, 1964, the Department of Education was established with the Minister of Education replacing the Minister of Youth in terms of responsibility for education in Quebec. In addition, the Council of Education (both the Catholic and Protestant Committees) was abolished and replaced by a representative body the Superior Council of Education in July, 1964. The Superior Council was established as a consultive body for educational planning in the province. Of particular interest to this study was the establishment of the collegial education system. The Parent Commission had noted the lack of vocational and technical education in the province, and also the rather difficult access that existed for francophones to continue their education to the post-secondary level. Thus, legislation was passed which introduced a new level to the education system in Quebec. The CEGEP (Collège d'Ensigment Général et Professional) was given the role of providing post-secondary professional and technic- 93 al education, and the role of preparing students for university entrance. The standard route to an undergraduate degree therefore became six years of primary school, five years of secondary school, two years of CEGEP, and three years of university work. Terminal vocational programmes at the CEGEP's were typically three years in length. The first French-language CEGEP's opened in 19 6 7, a task facilitated by the existence of the college class- iques. On the anglophone side particular problems occurred because no institution of a similar nature had existed in the past. Eventually, the Government and the English-language universities worked out a plan whereby the universities (including Bishop's University) would, for a temporary period, offer CEGEP -similar programmes. The Parent Commission had been adamant in opposing university participation in the collegial level of education--the feeling being that universities would dominate and control these junior institutions for their own interests. There can be no doubt that educational reform was a priority item in the province's agenda during the 1960's. Indicative of this fact was the dramatic way expenditures on education increased during this period, particularly during the five years from 1960 to 1965. In fact, from 1962 to 1964, expenditures on education went up to close ta 30 percent of the total expenditures of the Government of Quebec. While the provincial budget called for $127 million dollars ta be 94 spent on education in 1958-1959, by 1964-1965 that figure had risen to $480 million dollars. 17 The effects of this investment on Quebec society were dramatic. Whereas in 1957, fewer than one half of Quebec's French-speaking citizens were reaching Grade 7, by 1978 83 percent had achieved this level of scholarity. Equally impressive was the fact that by 1978 about 40 percent of Quebec francophones had attended CEGEP. 18 4.4.2.2 The Economy Government intervention was not limited to the educational area, but rather covered many aspects of Quebec life including the economic sphere. The structure of the Quebec economy had for years been a source of irritation to francophones i having a dual nature which for many was not unlike that of an underdeveloped country: One cannot but be struck by this analogy ...Quebec has a dual economy: one sector, very powerful, based on natural resources exported in the context of the economic evolution of the whole continent, and characterized by very large enterprises; the other, immeasurably small, scarcely influenced by the former, based especially on the satisfaction of local needs.19

17Annuaire du Québec, Various Years. 18 Paul Bernard et al, L'évolution de la situation socio-économique des francophones et des non-francophones au Quebec (1971-1978), Office de la langue française, Gouvern- ement de Québec, 1979, p.98. 19 Report of Interministerial Committee of Study of the Income System of Quebec, cited in James Bamber, "Lévesque contre la Noranda", Le Macleans V, II (November, 1965), p.71. 95

In 1960, a number of government studies were set up to study the economic structure of Quebec. The Conseil d'orientation économique became active; and the Société général de financement du Québec was created to invest funds from small, priva-te investors in developing the Quebec economy. Clearly, however, the most critical decision which was made during the early 1960's was the nationalization of electricity through Hydro-Québec. This action which was led by the then Minister of Natural Resources, René Lévesque, took place in 1963, after a provincial election was called on the issue. The proponents of the nationalization pointed out that Quebec with the greatest hydro potential in Canada had one of the least efficient systems, and that the system was controlled by American and English Canadian interests. Hydro electricity was for many, the key to the development of economic independence, and to industrial development for Quebec. Other government actions in the economic field took place throughout the sixties. Quebec saving bonds were introduced in 1963; a Labour Code formalizing collective bargaining relations in the province was organized in 1964; SOQUEM (La

Societé québecoise d'exploration miniere) was set UD in 1965 so that the government could participa-te in the development of mineral resources; and SIDBEC the government owned steel mill was created in 1968 when Quebec purchased controlling interest in Dominion Steel and Coal Corporation. The creation of the Quebec Pension Plan in 1964, also meant that the 96 government had a large amount of pension funds to invest: the Caisse de depat being established in 1965 to channel these funds back into the Quebec economy. Also in 1968, the Office de planification et development de Québec was created replacing the Conseil d'orientation economique. Government involvement in resource projects was clearly one of the characteristics of the Quiet Revolution. Quebec negotiated with Newfoundland in 1966 (much to Newfoundland's regret years later) to develop the Labrador hydro electric resources. This interest was continued in 1971 when the Bourassa government announced the massive James Bay project. Along with these important interventions in the Quebec economy, came a series of other involvements too numerous to mention here. The construction of a modern system of auto- routes, changes in minimum wage laws, regulations of industries falling under provincial jurisdiction (notably construction) were just a few of the rather extensive actions of the Quebec government in economic affairs. 4.4.2.3 Social And Health Services Aside from education, the area in which government interventions had the greatest effects on the average citizen were in social and health care services. On December 15, 1960, the Quebec Hospital Insurance Act was adopted to provide health insurance to the population, virtually covering ah l of the costs of a hospital stay except for doctor's fees. This plan was extended to cover certain outpatient services in 1962 97 and again in 1965. Medical insurance was introduced to the province effective November 1, 1970; and limited dental care for children was announced in 1971 and implemented in 1974. The Government of Quebec was also very active in the social service area. The Quebec Pension Plan was announced in April, 1964 and a Royal Commission of Inquiry on Health and Social Welfare/Income Security was appointed in 1966. By 1970 this commission had led to the creation of the Depart- ment of Social Aff airs, and the passage of Bill 65 in Dec- ember, 1971. Bill 65 completely reorganizaed the way social and health services were delivered in the province. Other important changes involved the establishment of a provincial family allowance system in 1967, and a reorganization of social aid in 1969. Significantly, a law was passed in April, 1969, permitting civil marnages in Quebec. 4.4.2.4 Cultural Affairs The Ministry of Cultural Affairs was established in 1961, and the Office de la langue française shortly there- after. Throughout the 1960's the Ministry took a very active part in encouraging Quebec films, theatre, art, and other cultural undertakings with grants and more substantial actions such as the establishment of Radio-Québec in February, 1968. Of more importance for the purposes of this study are the activities of various Quebec provincial governments in the area of language and language legislation. In 1969, after the St. Leonard School Board incidents (which will be discussed 98 below), Bill 63, (An Act to Promote the French Language) was passed. Essentially, this law (despite its name) established freedom of choice in the language of education; that is, it confirmed the right of immigrant parents to send their children to either English, or French schools. In response to continued criticism of this Act, The Gendron Royal Commission was established to investigate the situation of the French language in Quebec. By 1972, the Gendron Commission had completed its work concluding that the French language needed to be protected, and that strong action had to be taken. Bill 22 was passed in 1974 by the Bourassa Government; this legislation had a number of important provisions: French was made the official language of Quebec, access to English schools was restricted to those who could demonstrate a knowledge of English, and regulations were passed requiring French as the language of work for most organizations in Quebec. 4.4.2.5 Other Interventions Certain other actions and decisions involving the government of Quebec also played a strong role in the changes in Quebec society which took place after 1960. Therese Casgrain was elected as the first female member of the leg- islatlire in 1961 and in 1962 was appointed to the provincial cabinet. The voting age was lowered on January 1, 1964, making individuals eighteen years of age and older eligible to vote in provincial elections. Also, in 1964, a comprehensive act was passed completely reforming municipal affairs 99

in the province. 4.4.3 Nationalism A second theme which can be used to organize the events of the Quiet Revolution is the growth of Quebec nationalism, and the growth of support for the independence of Quebec as a political state. Historically, of course, these phenomena were not new to Quebec; yet it is certainly true the sixties saw an increase in the intensity of nationalism in the province of Quebec. Political events of the 1960 to 1976 period can be used to provide an outline of the development of independence as a political issue culminating in the election of the pro-independence Parti Québecois in 1976. The 1960 to 1966 period saw the formation of a number of political parties, albeit small ones, which expounded nationalism and independence as fundamental principles. In September, 1960, the Rassemblement pour l'Indépendance Nationale (RIN) was formed by André d'Allegmagne; other well known individuals such as Marcel Chaput and Pierre Bourgault were also involved. Chaput left the RIN in 1962 after a power struggle and formed a new party-- the Parti Republicain du Québec. A further break occurred in 1964 when several dissident members of the RIN broke away to create yet another party, the Regroupment Nationale which itself later merged with dissident Créditistes to form the Raniment Nationale. The 1962 election which was waged on the issue of the nationalization of hydro-electricity, as noted above, also 100 gave impetus ta the nationalist cause. The Liberals used as their campaign slogan, "Maitre Chez Nous"--masters in our own house--during the election. 1963 saw activity on a couple of fronts. The federal Social Credit Party was split by a dispute whereby the Quebec branch of the party disavowed their party's leader Robert Thompson, and more or less began to operate as an independent party. Premier Lesage also demonstrated Quebecsautonomous inclinations in May, 1963, giving the federal government the ultimatum that Quebec had ta have 25 percent of income taxes collected on individuals and corporations in the province, and contrai of the inheritance tax. By 1965, the Quebec government had begun ta seek power in certain areas of external affairs. The first of a long series of battles with the federal government took place in April, 1965 when the provincial government took the position that it could make agreements in areas where it had jurisdiction under the British North America Act (the Canadian constitution at that time). The 1968 ta 1970 period was particularly bad in this respect with Quebec and Ottawa feud- ing over Quebec's raie at an education conference in Gabon, over a Quebec/France communications satellite agreement, and over Quebec representation at a Niger conference for francophone nations. A provincial election was held in Quebec in 1966 and was remarkable in two respects; Daniel Johnson became premier, 101 marking the start of a period where more nationalist premiers would take a very tough stance on constitutional affairs with Ottawa; and the election marked the first Ume that contemporary independence-oriented parties had contested a provin- 20 cial election, receiving about 6 percent of the popular vote. In the year 1967, Charles De Gaulle came to Montreal for Expo 67, and created a diplcimatic incident when, in a speech at the Montreal City Hall, he shouted "Vivre le Quebec Libre", a separatist slogan. October, 1967, was also notable because Réne Lévesque left the Quebec Liberal Party alter that party failed to adopt independence as a platform. The year 1968 was again an important year for the nationalist movement in Quebec. The name of the Quebec Leg- islature was changed in the National Assembly and importantly, the Parti Québecois was formed) bringing together Lévesque's Mouvement pour la souveraineté-association, the RIN, and later the Rassemblement Nationale. Thus, by 1968 the nationalist cause had finally become .or:ganized into one political party, and somehow in the process of organizing itself had managed to lose many of its more radical elements which had advocated not only the independence of Quebec, but the replacement of the capitalist system as well. Robert Bourassa, and the Liberal Party, won the 1970

20Annuaire du Québec, 1967. 102 provincial election; nevertheless, the Parti Québécois obtained 23.1 percent of the popular vote and took seven seats in the National Assembly2 -1 -a respectable first showing. Nation- alist pressures were kept up, during the 1970 to 1973 period to the extent that Bourassa was unwilling to agree to the 1971 Victoria constitutional settlement. Quebecers, Bourassa felt, just would not have accepted the proposal. In 1972, Premier Bourassa proposed the goal of cultural sovereignty for Quebec and backed Up his stance by waging an ongoing jurisdictional battle with Ottawa in a number of areas, the most important being in the communications and social policy areas. In retrospect, it is clear that the 1973 election was fought on the platform of the Parti Québécois. The result was 102 to 6, and a Liberal sweep of the province as Quebec politics moved toward a two party system. Lost in the massive Liberal victory was the clear fact that support for the Parti Québécois had actually grown in the three years since 1970, 22 reaching 30.2 percent of the popular vote. In 1976, the Parti Québécois took power winning 71 seats (out of 110 seats) and gaining 41.4 percent of the popular 23 vote. During the 1973 to 1976 period two incidents had

21 Ibid, 1970.

22 Ibid, 1973.

231bid, 1978. 103 dominated the provincial scene: Bill 22 language legislation and the air traffic control incident. The latter incident involved the federal government's attempts to expand the use of French in air traffic control in Quebec and the resistance created to these attempts by a number of elements in English Canada. 4•4•4 Social Protest The third theme which can be used to study the post- 1960 period in Quebec is social protest of either a violent, or a more peaceful nature. 4.4.4.1 Violence While it is clear that the majority of those sympathetic to the pursuit of Quebec nationalism were content to use peaceful means to achieve their goals, others were not. Be- tween 1963 and 1970, a number of terrorist activities took place which certainly affected the mood of the province. Starting in the spring of 1963, bombings became quite frequent in Quebec. On April 20, a bystander was killed by an F.L.Q. (Front de la libération du Québec) bomb. In May, 1963 the Quebec government offered a $50,000 reward for information leading to the capture of F.L.Q. members. Arrests followed; yet the bombings did not stop. On July 12, 1963, the Monument of Queen Victoria in Quebec City was destroyed by a dynamite explosion; the significance of the date of the explosion was not unnoticed by the anglophone community of Quebecmost of whom were Protestants. Over the next five 104 years, events of a similar nature took place in Quebec, usually in Montreal. Armories were robbed of guns and ammu- nitions; bank hold ups took place ta finance the activities of the F.L.Q.; and there were many bombings. Between 1968 and 1970 terrorists activity intensified. On December 16, 1968, in response ta the forty eight bombs that were planted in Montreal during 1968, a $10,000 reward for information concerning those responsible was posted. February, 1969 was one of the worst months for terrorist bombings , including; a bomb outside the Montreal Armories near Place Ville Marie, a $500,000 bombing of the Montreal Stock Exchange injurying twenty-seven persons, a bomb explosion at the Liberal Party social club, and a bomb explosion at the Queen's Printer Store in Montreal. On August 22, 1969, an extensive campaign against terrorism was launched by the combined police forces of Quebec City, Montreal, Quebec Provincial Police, and the R.C.M.P. Terrorist activity continued in 1970. Twelve terrorist incidents took place around Montreal in May and June of that year. The response of the Quebec government was ta establish a $50,000 reward fund for information, and ta question four men and two women at a special inquiry into subversive activity after police had seized money, explosives and weapons. In October, 1970 one of the more important incidents in Quebec and Canadian history took place. The October Criais began on October 5, 1970 when James Cross, a senior 105

British Trade Commissioner in Montreal, was kidnapped at his home by a cell of the F.L.Q. In return for his release, the F.L.Q. demanded money, freedom for certain convicted terrorists, and publication of a political manifesto. These demands were refused. Events escalated on October 10, when Pierre Laporte, Minister of Labour in the provincial government, was kidnapped and later murdered by another cell of the F.L.Q. On October 16th, the War Measures Act was implemented and troops were called in to guard public buildings in the province. Also, known nationalist sympathizers were rounded up and placed in jail--an act which later would be rejected by many Quebecers and Canadians because of the infringements of civil rights which took place during this action. In retrospect, the October Crisis of 1970, for the most part, brought to an end terrorist activity in Quebec. While criminal proceedings of F.L.Q. members dominated headlines in 1971 and 1972, few terrorist incidents occurred after October, 1970. 4.4.4.2 Other Social Protest Other less violent forms of social protest took place in Quebec during the 1960's and early 1970's. Demonstrations of many sorts were common involving a number of issues with, of course, nationalist causes being a prime source for protests. Other causes arose because of perceived injustices brought about by the rapidly changing Quebec society. Although usually peaceful ) occasionally events would get 106 out of hand leading to confrontations with the police, and sometimes arrests. Some examples give an idea of the types of protests involved. In May, 1965 twenty-five individuals were arrested in Montreal during a pro-independence demonstration during the Victoria Day holiday. On the saine day, three momuments in Quebec City were damaged in similar protests. On January 17, 1966, a strike of 27,000 students in technical and trade schools in Quebec took place; the students were protesting the extension of the school year by two and a half weeks. The 1968-1969 period saw a number of important incidents. The St. Leonard School Board incident errupted in June, 1968 when voters in the Montreal suburb of St. Leonard elected members to a local school board who had vowed to make ail non-English speaking students attend French-language schools. In September, parents and other supporters of the students concerned (many of whom were Italian immigrants) protested the action of the St. Leonard Board. The issue was temporarily settled when some private classes were set up, and when other students were accepted in the Protestant school system in Montreal. Later in 1969, Bill 63 was passed giving parents freedom of choice in terms of the language instruction for their children. Other protests also took place in 1968 when students at Lionel Groulx CEGEP in Ste. Thérese occupied their school on October 7, demanding more economic planning in Quebec to 107 provide better jobs for graduates, better job related skill training, and a second French-language university in the Montreal area. Demonstrations and protests by taxi drivers over rights te pick up customers at Dorval Airport also led to clashes with police on October 30, 1968. 1969 did not bring a reduction in social tension. In February militant students at Sir George Williams University rioted after an alleged racial incident (involving a black student) ) destroying the university's computer center and causing $1,000,000 damage. Another incident took place in March, 1969 when nationalist students marched on McGill Uni- versity demanding that McGill be turned into a French language university; a number of arrests for disturbing the peace and assaulting policemen were made. In September, 1969 the St. Leonard School Board incident again errupted; the protests this time, however, coming from Raymond Lemieux and the Mouvement pour l'intégration scolaire who protested the presence of English schools in the province. The Riot Act was read after two incidents of violence in eight days. Later when Bill 63 was introduced in the National Assembly, five days of demonstrations took place against the fact that the Bill guaranteed parents freedom of choice in the selecting of schools for their children. During the 1970 to 1976 period demonstrations did continue ta occur but not with the same intensity of the late 1960's. Part of the reasons for this were the fact that the 108

City of Montreal passed by-laws requiring licenses for demonstrations, and, of course, passage of the War Measures Act in 1970. Many protests and demonstrations involving labour disputes did take place. Other important protests included demonstrations in support of the Common Front labour leaders when they were jailed for contempt of court charges; protests against Bill 22 by nationalist groups because it was not stringent enough in limiting access to English schools; and demonstrations by native peoples concerning land claim agreements arising out of the construction of the James Bay project. 4.4.4.3 Labour Militancy A final aspect of the social protests of the Quiet Rev- olution is labour militancy. The 1960 to 1976 period of labour history in Quebec was a period of intense union activity (particularly in the public sector), labour militancy, and frequent confrontation. One way of gaining an overview of this phenomenon is to examine the number of labour disputes in the province in comparison to the rest of Canada. Figure shows the percentage of total strikes and lockouts in Canada which took place in the province of Quebec, and the percentage of total mandays lost in labour disputes in Canada which were lost in Quebec. A number of points are important in this figure. The first is that the 1960 to 1968 period was an extremely important period in terms of labour unrest in Quebec. While the province never had a high percentage of the total strikes and 109 UT S CKO LO

' S BE C UE Q 110 lockouts in Canada (22.2 percent being the highest in 1966) in any year, Quebec lost more than its share of mandays during this period. In fact, between 1960 and 1968, Quebec mandays lost averaged 34.2 percent of the total Canadian time lost, with two years being particularly bad, 1962 and 1967. 23 In retrospect, this unrest was not surprising given that the 1964 Labour Code was an extremely liberal piece of labour legislation. This Code effectively gave full collective bargaining rights ta most public service employees in the province; thus, between 1964 and 1967, hospital employees, civil service workers, Hydro-Québec workers, civil servants, professional employees, and teachers were organized. The result of this organizing activity was a series of labour disputes in the public sector as each group tested their new found rights. Obviously, a complete review of major labour disputes is beyond the scope of this paper; nevertheless, it is possible ta note some of the disputes which received wide public attention; 1965 - Teachers, Liquor Board employees 1966 - Hospital workers (non-medical) 1967 - Clerical Workers, City of Montreal Teachers Montreal Transit

2 3Mirdster - e.Labour, Canada,;. Strikes and LoCkouts in Canada, 1946 to 1976. 111

1969 - Domtar Pulp and Paper Police and Fireman (Wildcat) Teachers Hydro-Québec 1970 - Hospital Workers Medical Specialists Construction Workers 1971 - La Presse Newspaper 1972 - "Common Front" - Para-Public and Public Service Employees 1975 - Transit stike - Montreal 4.5 The General Environment And The Anglophone Population The three general environmental forces outlined in this chapter--changes in the demographics of the anglophone population, changes in the structure and importance of the Eastern Townships region, and changes brought about in Quebec society because of the Quiet Revolution--can be brought together to form a picture of the trends affecting anglophone institutions in the Eastern Townships. The picture that e- merges for the 1946 to 1976 period is not positive. The anglophone population, while not declining much in absolute numbers declined as a percentage of the total regional population, however one defines the region. In other words, the anglophone population became relatively less important in the 1946 to 1976 period. Also, the average age of the population increased as many younger anglophones left the region for Montreal, or other provinces. For anglophone institutions that were dependent upon the local anglophone population for their clientele, this meant that, for the most 112 part, natural growth could not be expected unless strategic changes were made in their traditional products/services and markets. Not only did the anglophone population face low growth and a decline in its importance, but the Eastern Townships region as a whole also declined during the 1946 to 1976 period. The population of the Eastern Townships declined as a percentage of the total Quebec population, and the region had a negative net migratory balance for much of the period. The rate of urbanization was the lowest of any region in Quebec between 1961 and 1971. The region also was at a disadvantage because of its industrial structure: tertiary industries being underrepresented and primary industries, especially agriculture and forestry being overrepresented. Manufacturing industries were dominated by older, non-growth industries such as textiles, and pulp and paper. Before 1960, the anglophone population of the Eastern Townships, like that of Quebec as a whole, seemed quite comfortable with the social order then existing. As a group, it is clear that anglophones were better off than francophone Quebecers in ternis of education, income prospects and chances for promotion. In fact, although it was flot scientifically measured for this study (because the research instruments used in this research were not designed to laok at this type of issue) the overwhelming impression that emerges from interviews of anglophones who were old enough to remember the pre-Quiet 113

Revolution period, was that 1946 ta 1960 was a very peaceful and comfortable period. Premier Duplessis was often praised because he left the anglophone community alone ta run its own affairs as it saw fit, and because he was generally very fair to anglophone insitutions. The Quiet Revolution changed this perspective. Many of the elements of the 1960 to 1976 period,reviewed earlier,had negative consequences for the anglophone population. Govern- ment intervention, it must be recalled, was geared toward answering the dissatisfaction many francophone Quebecers had with the existing social order. Reform of education removed an advantage the anglophone population had over francophones in the province; health care legislation, although obviously welcomed by ah l Quebecers, also meant increased government regulation; and actions of the government in the cultural and language areas clearly were aimed at promoting French and not English. Nationalism was a clear threat to the anglophone community which had strong linguistic ties with the English-speaking majority in the rest of Canada. Social protest in the province during the 1960's was often aimed at symbols the anglophone community strongly identified with ) such as the concept of Canada as a united country and the monarchy. Often the protests, particularly in Montreal, were aimed directly at the anglophone communities own local institutions. On the whole, it appears quite safe to state that the Quiet Revolution created a social environment which 114

was perceived by many in the anglophone community to be uncertain, and hostile. Ta summarize then, anglophone institutions in the second hall of the 1946 to 1976 period (particularly alter 1960) which at best could be described as a low growth environment, at worst a declining environment. The four anglophone institutions studied for this research, while affected differently by these trends, found themselves serving a clientele which had become demographically less important, in a region which itself was declining in importance ) and in a province where the social environment was perceived to be increasingly becoming less friendly to anglophones and ta anglophone institutions. 4.6 Summary In this chapter several aspects of the shared environment of the four organizations studied in this research were presented. The English-speaking population of the Eastern Townships was shown ta have moderately declined over the 1946 ta 1976 period in absolute numbers. While a substantial number of English-speaking individuals continued ta live in the area, the English-speaking community declined in relative importance. Next a profile of the Eastern Townships was presented indicating that region has not kept pace with average growth in the province in ternis of population growth, urbanization, and industrial development. Primary industries in 115 low growth sectors continued to represent a major percentage of the activities of the labour force than in most of the other areas of Quebec. Finally, this chapter reviewed the social changes of the Quiet Revolution in Quebec organized along the lines of three major themes: government intervention, economic and political nationalism, and social protest and unrest.

CHAPTER V

BISHOP'S UNIVERSITY

5.0 Background Bishop's University is situated in Lennoxville, Quebec, near the City of Sherbrooke, on an attractive 310 acre campus at the junction of the St. Francis and Massawippi Rivers. Incorporated in 1843, it received a royal charter to grant degrees in 1853. The initial intention of its founders was to provide training for Anglican clergy, and to offer a "sound and liberal education" to lay students. At the start of the period of study of this research in 1946, the University was still under the aegis of the Church of England, and had about two hundred students and twenty faculty. 5.1 Summary Of Strategic Decisions Key decision streams of Bishop's University can be grouped into four categories: programme offerings and academic policy, resource allocation decisions, decision making structures and processes, and external relations. Figure 5 summarizes these decision streams for the period 1946 to 1976. Ap- pendix B of this thesis presents a detail description of the major decisions taken by Bishop's University, and some of the results and environmental events important to the understanding of this organization.

FIGURE 5 SUMMARY OF STRATEGIC DECISIONS BISHOP'S UNIVERSITY, 1946-1976

Prograrrios

Expansion Length of Programmes

TIi•ee Four Years Three

Admission Reauirements Low High

Maximum Enrollment (Desired) Stability I l Increasing Residential Emphasis Heavy Decreased

Recruitment Increased Activity

Continuing Education New Courses

Size of Faculty Cutbacks

Capital Investments

Decision Making Processes

Authoritarian 11 Consultative Participative

Formalization (Decision Making)

Increased Heavy Informai Formalization

Government Financing Depend- Independence Increased Dependence I ence Government Relations IID efens- Cooperative [ Transition I iveness

Other Decisions Champlain Space Rental GEGEP Similar Programme --__3 1111

1950 1960 1970 118

5.2 Identification Of Strategic Periods In analyzing this summary figure, three relatively clear periods of strategy seem to emerge. Beginning in 1947 (the two immediate post-war years seem to be part of a pattern connected with World War II) a period of moderate expansion and modernization took place coming to an end around 1957, or 1958. After the completion of the modernization of physical plant programme in 1951, this period was a stable period with little change in other important decision areas. The size of the UniversitN' its residential nature, academic programmes and standards, decision making structures and processes, and external relations changed very little during these years. Around 1957 this pattern was broken with changes taking place in a number of decision streams. The University decided to expand both in terms of student numbers and physical assets; academic standards were upgraded; and new programmes were introduced, particularly in the social sciences and business administration. This period is characterized by a change in the nature of Bishop's relationship with the provincial government with respect to both programmes and financing. Other changes in decision streams seemed to break after these major changes (in certain cases as a result of them) including: a decreased emphasis on the British-residential character, increased faculty involvement in decision making, a formalization of organizational structures and decision processes, and an increase in the number of foreign educated faculty, in particular 119 those with first degrees from the United States, and other countries (the percentage with British first degrees remained constant). The final period which can be inferred from these decision patterns begins Ln late 1970, or early 1971 ) when again the pattern of many different decision streams changed. Bishop's began to emphasize recruitment and continuing education, admission standards were decreased, the size of the faculty was greatly decreased, and the decision making structures of the University were changed to allow for greater faculty and student participation in decisions. Around 1971 as well, the organizational structure of the University was simplified although decision making processes were formalized. Externally, the University adopted a defensive posture with respect to relations with the provincial government. 5.3 Description Of Strategic Periods 5.3.1 1947 to 1957, Modernization/Stability The physical plant of Bishop's University, like that of many Canadian institutions, was in dire need of modernization in 1946. The War had caused needed repairs and changes to be set aside. This condition also existed in terms of the corporate structure of the University. Prior to 1947, Bishop's decision making power was dominated by its Principal, Dr. McGreer (1922-1947), and the Anglican Bishops of Quebec. McGreer managed to make changes to reduce the power of the Anglican Bishops including the appointment of non-Anglican 120 members to the Corporation of the University. This movement culminated in the revisions of the University's charter in 1947, and the appointment of John Molson as the President of the Corporation--the first time the position of President had been held by an individual other than an Anglican Bishop. The words of a Bishop's graduate who returned to work at the University best describes this change: Dr. McGreer ran Bishop's. When he came we were at a very low ebb 2-19227, and he just realized that the weakness of the place was the Corporation. In the early days, the Corporation was made up of Eastern Townships people and Quebec City people; and he realized that the center of influence of Quebec had moved from Quebec City and Sherbrooke to Montreal...So what he did was, he went through the list of alumni, and got F.E. Meredith and George Montgomery who had been Bishop's graduates, and he went to Montreal and persuaded them to join the Board. With them as a nucleus, he then headed a campaign...he built the Board. Everytime old clergymen would re- tire they would be replaced by prominent businessmen from Montreal...he also picked out some Eastern Township people as well because you had to have two lots of people; you had to have people who had money and influence; and also fellows, on the spot, to do local work... John Molson served as President of the Corporation of Bishop's University until 1964 and increasingly his influence, and that of other businessmen on the Board of the University, became important. This was especially true after the death of

1Interview with a former senior administrator, Bishop's University, Lennoxville, Quebec, June 1981. 121

Dr. McGreer, who disappeared on December 10, 1948 ) apparently drowning after accidentally slipping into the Massawippi River. During the 1950's the Executive Committee of the Corp- oration exercised its right to make decisions over a wide variety of issues at the University, at one point even.ap- proving such minor matters as the purchase of a filing cabinet. Academic decisions were heavily influenced by the Principal, Dr. Jewitt, and the Vice Principal. Little change in the character of the University took place. Bishop's was still very much a British-style residential college with a small size, longer terms and breaks, a number of Anglican clergy on faculty, and a curriculum emphasizing the humanities, natural sciences, and theology. Gowns were still worn and chapel, while not compulsory, was still an integral part of University life: The character of the place had flot changed. There were about three to three and a half 5ositionS7 in Theology. A significant part of the enrollment was people being trained for the priesthood as B.A.'s in Theology, or Licentiate; and it was'high" Anglican. They were not interested in social issues.2 After a successful campaign, a programme of modernization did take place between 1948 and 1951, during which time two new residences, a gymnasium, and a heating plant were

2 Interview with a Bishop's faculty member, Professor A, Lennoxville, Quebec, August 1981. 122 constructed. The academic year 1949-1950 was the central year in the construction activity. After the 1950-1951 academic year the University settled down to operate as it had in previous times. On the academic side, few major changes took place. With the exception of one or two new courses, the degree programmes of the University were the same. Admission standards while up somewhat from the 1945-1947 period were still relatively low in comparison with what they would be in the future. Most of the subjects taught were taught by one person who often would teach in two, or more,areas. Only about one quarter of the faculty held doctorates during this period. The University had strong British ties at this time with about 20 percent of the faculty being Anglican ministers, and with about 40 percent of the faculty holding at least one British degree. Student numbers increased very gradually over this period, increasing from about 200 students in 1945-1946, to about 300 students in 1956-1957. Recruitment was not a major problem, in fact, the University had to turn away over 100 students in 1947 before its expansion of residence facilities. By 1953, the Eastern Townships and the balance of the Prov- ince of Quebec each contributed about 40 to 45 percent of the total students enrolled ) with the remainder coming primarily from other Canadian provinces. A faculty member from that period has described the student body of the 1940's and 1950's 1 23 in the following way: Until 1950, or later, this was essentially a poor man's university. It was small, it was cheap. A large proportion of our people came fron the Townships, and some from the Ottawa Valley, with relatively few from the island of Montreal. During the 1950's, there was a change, and we began to get people from private school backgrounds. /The shift to more students from Montreal corresponded to a certain amount of demographic shift in the English-speaking population of the province--in the late 40's it started to move into Montreal and environment.3 The student body was overwhelmingly Protestant in the late 1940's with over 80 percent of the student body linking their religious affiliation as Protestant. Relations with the Duplessis government were very good because of the fact that many of the members of the Corporat- ion, particularly John Bassett, Sr., were friends of the Premier. It should be noted, however, that the provincial government only provided about15-17 percent of total operating revenues during this period, although it did provide a $1,000,000 grant to assist the 1949-1950 expansion. It is also clear that the relationship of the University with the anglophone elite of the Province was firmly established during the presidency of John Molson. As one faculty member noted: In a very real sense Bishop's University became a creature of the Montreal anglophone establishment- -A kind of a "pet".

3Interview with a former Bishop's faculty member, Prof- essor B, Lennoxville, Quebec, August 1981. 124

The fact that it is located in Lennox- ville is completely incidental. It could have been located in Shawbridge, or wherever; it really matter. It was not an integral, or organic development from the local community. It was something, imposed from without, run from without, where the important money, and influence came from Montrea1.4 5.3.2 1957 to 1970, Growth By far the most dominant decisions of the 1957 to 1970 period affecting Bishop's University were decisions to expand the University in terms of both physical size and academic offerings. While it is true that student numbers did increase during the 1946 to 1957 period, they did flot: increase nearly as rapidly as in the 1958 to 1970 period when Bishop's went from about 300 to over 1,200 students. In analyzing this change in pattern it is clear that the decision to expand was, more or less, done without a great deal of planning--although the faculty would regularly debate the size the Univer- sity should be. Evidence of serious discussions concerning the future of the University cannot be found until 1964 when various groups were invited to submit briefs on the future of Bishop's to a special meeting of the Corporation. The attitude of most members of the Executive Committee cari be summarized in the words of one of its members inter- viewed for this research, "We were just too damn small, we

4Interview with a Bishop's faculty member, Professor C, Lennoxville, Quebec, June 1981. 125 had to get bigger". Little discussion about growth took place, and gradually numbers were pushed up because there was no decision to limit enrollment when official maximum size limits were exceeded. A comparision of acutual enrollment figures with the stated maximum size the University would allow (Figure 6) shows the pattern: limits would be established, then they would be exceeded; and finally, they would be reset at a higher level. A faculty member explained the process: What happened was that every time we built a residence, almost by magic we could fill that residence by the time it was completed. This is one of the reasons why we expanded, it indicated that people wanted to send their youngsters to residential universities. So when we could we would offer increased residence space, we expanded; when we couldn't we stablized.5 A second aspect of the growth strategy is also indicated in the above statement: external forces induced the University to increase its size. On the student side, there appeared to be little difficulty in Bishop's University obtaining an increased enrollment. Another faculty member who was active in preparing the Faculty Association's brief on the future of the University in 1964 explained that continued growth was anticipated throughout the 1960's: Ogie (Ogden Glass, sugggsted ameeting of the Corporation and the future of the University. They asked a number of

5 Interview with a Bishop's faculty member, Professor D, Lennoxville, Quebec, September 1981. 126

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people to prepare papers...I prepared a paper on growth potential, and attempted to forecast enrollment in the Protestant system, and the trend. I just related that; I saw L---Ehat7 it was reasonable to expect growth... when we prepared our report we suggested that they should be thinking in terms of 600 or 800. It LThe report7 was received by the administration, but we never heard anything: except that things kept going in the direction we proposed.6 Growth was also induced by the financial support that was available both from the provincial and federal governments, and private supporters, in the 1956 to 1970 period. Bishop's grant from the Quebec government was increased in the late 1950's and, after the Ottawa/Quebec dispute on funds for higher education was settled in 1959, it became clear that a lot more would be available in the future for both operating and capital purposes. Earlier e between 1957 and 1960, the Univer- sity had conducted a successful campaign. If funds were available from both government and the University's supporters, why not use them. Unlike the decision to actually expand the University, clear decisions concerning the expansion of physical assets (which, of course, allowed growth in student numbers to take place) can be found. Throughout the 1958 to 1970 period additions were made to Bishop's physical plant. The list of major buildings constructed was long: four new residences, a new library, an academic building, an administrative

6Interview with Professor A. 128 building, a student center, a dinning hall, an extension to the Science Building, and a theatre. The expansion of academic programmes also got underway in the late fifties with the social sciences and business administration being added to the curriculum. The latter programme deserves a particular comment in that one of the reasons it was initiated at Bishop's was to maintain an adequate male/female ratio amongst the students: Bishop's did not want to be known primarily as a women's college, and business administration programmes attracted mostly male students at that time. Admission requirements were increased in 1960 to 70 percent, and academic programmes were set at four years of study from Junior Matriculation. Obviously, the abundance of potential applicants meant that the University could be more demanding in terms of academic requirements. Expansion and growth resulted in a number of other decisions eventually being made. The size of the faculty had to be increased to support the larger student body. In 1958, there were approximately twenty-eight members of faculty; by 1970 the faculty had grown to over eighty members with the major increase coming in the 1961 to 1965 period. This increased size made it impractical to make decisions in meetings of the entire faculty; thus, a Senate was established, and a committee structure emerged to handle academic issues in a systematic_manner. There can be no doubt that expansion greatly changed 129

Bishop's University. In many respects it seems peculiar ta speak of only 1,200 students as being an expanded size capable of changing a university; yet, after 1960 non-resid- ent students at Bishop's made up over fifty percent of total enrollment, and it was impossible to retain the residential, British-style college atmosphere which had prevailed in the past. The decline of British traditions--chapel, gowns, a longer term, more holidays--had started in the 1950's; yet it was not until 1970 that the final vestige of these traditions-- compulsory academic gowns for students--was abolished. The student clientele itself did flot really change that much during this period. Bishop's students were still primarily Protestants. One change was that Montreal, particularly the West Island, now provided as many students as the Eastern Townships; few foreign students were in attendance. During the 1950's, and 1960's, Bishop's had developed a "Westmount" image in ternis of its student body. Actually, very few of the total students enrolled at the University came from West- mount; however, many wealthy Quebecers did send their off- springs to Bishop's and the prescence of these individuals was more noticeable at a small school thus creating an "elitis -r image. Bath internal and external criticisms of the Univer- sity during the 1960's referred to the snobbishness, the conservatism, and the remoteness from Quebec society, of the Bishop's student body. In one respect, the Bishop's student body did change: the caliber of students was improved, as 130 indicated by the fact that between 1958 and 1968 four Rhodes Scholarships, and comparatively more external awards, were won by the University's students. The faculty also changed with expansion. More Americans, and individuals who had obtained their first degree in countries other than Great Britain or Canada, now came to the University. In percentage ternis the rising relative importance of these individuals did not mean a decline in the number of professors with British first degrees, but rather a decline in the number of those with Canadian first degrees. Other changes in the faculty involved a decline in the percentage of total faculty who were Anglican ministers, and a slight increase in the number of Ph.D.'s, from an average of about 26 percent to about an average of about 32 percent. The influx of new, and younger, faculty members placed great pressure on the decision making structures and processes that Bishop's had been using in the past. Younger faculty, with very different attitudes and backgrounds, wished to have a say in the academic affairs of the University, and increasingly in the late 1960's,a say in other aspects of university life as well. The Rules, Orders and Regulations became important, and a subject of discussion. A faculty member has described the decision processes of the early 1960's: When I first arrived here, every once and a while someone would make eliptical reference to the R.O.R.'s. Nobody had seen them; there was rumoured to be a copy in the library, but the Librarian, or Chief Librarian, would not let anybody see them without the express 131

written consent of the Principal. This kind of attitude 5revailee, that there are rules etc., but they are secret. gom7 have to take their word that they were administering according fo the rules. How long do you put up with that! 7 Interviews indicate that the increasing pressures for more democratic decision making structures throughout the 1960's split the faculty into two camps: those who were comfortable with the authoritarian decision structures (for whatever reason); and those who wanted more participative decision processes. The inevitability of this type of power struggle was noted by the saine member of faculty: Decisions were made without debate; and very often many faculty did not know that decisions had been made until the consequences had been apparent to them. Ail of a sudden, this procedure had changed, or that department had been established, or those courses were being offered. Through the sixties the proportion of faculty who thought there should be formai mechanisms to institutionalize faculty participation in the decision making process gradually became stronger. It was inevitable because they were gradually recruiting faculty to increase departments, and staff new ones; these were generally younger people who came from a new generation.8 Compounding this problem was the fact that the academic leadership of the University was not particularly well

7 Interview with Professor C.

8 Ibid. 132 qualified to manage the 1960's expansion of the University. Many of the Department Heads had simply been appointed on the basis of seniority when their one-man departments had expanded. Even the Principal of the University, Ogden Glass, had been hired on the basis of his experience as Principal of Bishop's College School. Although a Rhodes Scholar, he was not a university academic and did not possess a doctorate: a fact which caused a great deal of faculty resentment at the time of his appointment in 1960: ...but you didn't really have anyone in a senior capacity who could, because they knew the university scene, rationally plan expansion. This is flot to say that the expansion was not rational; the departments that appeared here were the same as anywhere else, but whether they were rationally planned is another thing. By the time Glass left--the operation he faced in 1968 in scale and in types of problems, had changed. In 1960 and until 1965, or at least when he took the job, that type of problem 2The- scale, the rules7 were not a whole lot different than running B.C.S. He pictured it that way! Gradually, it got farther and farther away, more into the mainstream with a whole range of departments.9 By 1968 these pressures had forced Principal Glass to resign, and a search committee was formed to find a new Principal. The candidate hired was an experienced university administrator, Dr. Denis Healy, who at the time of his hiring had been a Vice-President at York University, Toronto. Dr.

9 Interview with a Bishop's faculty member, Professor E, Lennoxville, Quebec, August 1981. 133

Healy assumed his position on July 1, 1970, with an interim Principal serving during the 1969-1970 academic year. Relations with the provincial government became a critical decision area for Bishop's once grants to all universities were increased starting about 1960. Again it should be noted that the decision to accept increased levels of funds from the government during the early 1960's was not greatly debated, or discussed; it just happened. The one exception to this statement occurred in December, 1966, when a member of the Executive Committee, concerned over the level of government involvement, put the University's position very clearly: unless Bishop's developed new approaches it would become more and mare controlled by the government; lower standards would develop and the University would drift towards mediocrity. He suggested that the University should become more like an American East Coast liberal arts college along the unes of Williams, Amherst, or Colby, ah l of which were noted for their excellence. Stu- dents would pay the cost (not the Government) and substantial scholarships would be available for about twenty percent of the student body. Interviews with another member of the Executive Committee of that era reveal that, while everyone in the Committee agreed with the need for guarding Bishop's autonomy, there was little that could be done to reverse the trend. A substantial amount of funds would have had to be raised as an endowment to support such a move--it was just too late. Other day to day 134

concerns seemed of greater need for attention: enrollments were rising; faculty were being hired; and buildings were being built. The extent of Bishop's growing dependence on government funding is revealed in Figure 7 which shows the breakdown of the sources of the University's operating revenue. A fact which does emerge from decisions concerning government relations in the early sixties is that the Univer- sity became more careful in its dealings with the government. Unlike the 1950's when the University had a very open relationship with transactions being conducted either through local politicians, or with Premier Duplessis himself, affairs became more formalized as bureaucrats assumed more responsibilities in Quebec. Bishop's new approach seemed to be one more of testing, and observing, during this transitional phase. No major incidents of severe disagreements, or dissatisfactions, with the government cari be noted until 1968. Even in 1968 when Bishop's joined other anglophone universities in protesting operating grants awarded, Bishop's did not complain too loudly--perhaps because it had been very well treated in the past and the University knew it. Bishop's decision to assist the government in implementing the CEGEP system (by offering a collegial equivalent programme) was taken in a mariner similar to ail of its major decisions: little planning or discussion took place in terms of whether the University should take action; but lots of 135

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E-1 g r4 a z o r.4 Ç-T-1 0 çzi P-1 E-1 136 discussion took place on how it should be implemented. Little examination of the consequences of having a CEGEP on campus took place. Even though Quebec was relatively clear in indicating university participation would be temporary, Bishop's did not make temporary arrangements to hire faculty, or other temporary physical arrangements; it acted as if these new offerings would be permanent. Indeed, it appears that in the 1968 to 1970 period at least, the introduction of the CEGEP level was regarded as just another aspect of the 1960's expansion of the University. In summary, the 1958 to 1970 period at Bishop's in many respects cari be regarded as the "golden" period of the Univer- sity's history. Facilities and faculty resources were greatly improved; more and better students were enrolled; and the University was quite successful with external awards and recognition. Certainly, the case cari be made that this was, indeed, a very favourable era for Bishop's University. 6.3.3 1971 to 1976, Retrenchment The decision of the Quebec government to open a public CEGEP for anglophones in the Eastern Townships was, for Bishop's University, by far the most dominant event in the 1971 to 1976 period. For that matter, it was one of the most significant events in the University's long history. Most of the changes in Bishop's important decision areas which occurred after 1971 were in some way related to the removal of the collegial equivalent programme, and the resultant reduction of 1 37 the University to a three-year institution. Clearly, uncertainty marked the beginning of this period. Beginning in early 1970, the issue of whether Bishop's would be allowed to continue as a university (that is, with government financing) arose at the Council of Universities. It seemed that for many in Quebec City, Bishop's would have made an ideal CEGEP, and the area needed a public anglophone CEGEP. The Minister of Education, himself, at a press conference in Sherbrooke made statements to this effect. Some of this uncertainty was removed in the summer of 1971, when the Minister of Education gave the University a commitment that it would receive funds for the next five years; nevertheless, it was obvious that Bishop's would have to prove its viability, and reorient its programmes. A second source of uncertainty concerned plans for a public CEGEP. The government was at first unclear as to whether the Eastern Townships would have an anglophone CEGEP, and it was not until early 1971 that it became clear that Champlain College would operate in the Sherbrooke area. Even then Bishop's role with respect to the actual operation of the CEGEP was unclear. By the end of 1971 the administrative structure of Champlain College, Lennoxville Campus was in place and Bishop's role became clearer; the CEGEP would hire its own teaching staff, and Bishop's involvement would be limited to the provision of space and certain other facilities (library, for example) on a rental basis,until Champlain could build 138 its own facilities. The effects of the removal of the collegial equivalent programme on Bishop's enrollment were devastating. Enrollment dropped from over 1,200 students to about 600 students, as the University dropped from an institution offering five years of education to one offering three year programmes. Table 6 shows the changes in the years of instruction Bishop's was responsible for from 1969-1970 academic year to the 1974-1975 academic year. A number of points are significant in this table. The first is that although Bishop's implemented a collegial programme in 1969, the University never really got to the point where it was offering five years of instruction. For example, in 1970-1971 excluding failures, transfer students and students for some reason who had delayed their programme, Bishop's students were in the third and fourth years of the old four-year programme (U3 and U4), and the first two collegial years (Cl and C2). If the University would have reached the point where all five years would have been offered, its enrollment could have easily exceeded 1,500 students. A second point is that the creation of the collegial system had created an "empty" year in the Quebec anglophone system which theoretically did not work its way through the system until the end of the 1972-1973 academic year. Again it should be noted that some students for various reasons were off profile, and while theoretically no one should have been graduated from the University in 1973, 108 degrees were awarded 139

in May of that year. Further complicating this picture was the fact that the 1969 entering class was lower than it should have been because a number of anglophone students left the province, unhappy because of the extra year that had been essentially added to the requirements for a bachelor's degree. TABLE 6 YEARS OF THE QUEBEC EDUCATIONAL SYSTEM TAUGHT AT BISHOP'S UNIVERSITY, 1969 to 1975

Class Entering 1960-70 1970-71 1971-72 1972-73 1973-74 1974-75

September, 1967 U3 U4 September, 1968 U2 U3 U4 September, 1969 Cl 02 Ul U2 U3 September, 1970 Cl 02 Ul U2 173 September, 1971 Ul U2 September, 1972 Ul

NOTE: In September 1971 Champlain College assumed responsibility for the entering Cl(CEGEP) class. For Bishop's the critical point was that prior to the removal of the collegial equivalent programme it might have easily anticipated about 1,400 students in 1972-1973; after the removal of the collegial year, it actually had less than 700 students in 1972-1973 and about 800 students in 1973-1974. The search for student numbers became the critical activity necessary for the survival of the University. By 1973, the Council of Universities had actually specified the student numbers Bishop's had to achieve to be viable--1,200 students. Other demands involved the continuat- iLko ion of the sharing of facilities with Champlain CEGEP, and the offering of a liberal education to first cycle (bachelor's level) students. The changes Bishop's made in its strategic decision streams during the 1971 to 1974 period were obviously the result of the need to prove the University's viability. Ad- mission standards were lowered; major efforts at recruiting students were undertaken; and a continuing education programme was initiated. Other changes involved faculty cutbacks and, of course, the renting of facilities to Champlain College. A clear pattern of self-justification can also be identified in the University's dealings with the Quebec Government, particularly during 1971. Bishop's attempted to justify its rather small size by claiming that it was unique and that the Quebec anglophone system needed a small, residential, liberal arts type of university as an alternative to the large, urban, specialized universities in Montreal. Also, the University sent representatives ta various provincial committees, and tried ta act like any other of the province's universities. Aiding the cause was no doubt the hard fact that despite government financing decisions, the University had a charter, (unlike Loyola College which was forced ta merge with Sir George Williams University), and that charter was difficult ta revoke. A faculty member who represented Bishop's on these committees had described the period: The excercise inself-justification came, for the most part, after the split was made because 'La

what focused on it ail was the dramatic decline in numbers: defensive feelings --we are a university, they ehamplain7 are just a junior college; Bishop's is different than Champlain. ...it was in the 1973 "Reply to the Conseil", that most of this stuff 2That- is, the unique liberal arts, residential nature of Bishop's7 cornes through--in 1973, 1974, and 1975...it was critical that we flog- ged all of this stuff in Quebec City and everywhere else. I think that defensive- ness carried over to our institutional relationship to Champlain.10 Corresponding with decisions concerning Bishop's reaction to the loss of the collegial programme was a change in the way the University made decisions. Pressure that had been boiling up since the 1960's resulted in very significant revisions to the Rules, Orders and Regulations of the Univer- sity in 1971. These revisions gave very significant rights for faculty and student participation on the Executive Com- mittee of the Corporation. Thus, because changes in the decision structure occurred at the same time as the loss i of the collegial programme, reorientation of the University was made more difficult due to the fact that the faculty had a great deal of power in deciding the future course of the University. Bishop's did manage to increase its enrollment in the 1971 to 1976 period, but enrollment never reached anything close to the 1,200 level (900 was the 1975-1976 enrollment). The University's clientele did change, however, with francophone attendance reaching about 15 percent of the student 142 enrollment, and anglophone students coming from a much broader cross-section of Quebec society. It should be noted that these trends had started to take place with the introduction of the CEGEP system and were given a boost during Bishop's drive for enrollment in the 1970's. A second change in the University was the addition of more local Eastern Townships people to the Corporation. Another result of the period was that amongst Bishop's faculty, and the faculty of Champlain College, a very strong sense of mutual distrust and resentment developed. At the official level, the two institutions cooperated, especially in dealings with Quebec; at a lower level there was very little contact. Many Bishop's faculty had treated the Champ- lain personnel as interlopers when the CEGEP was formed j and the relationship had gotten off to a very bad start. The poor relations with the teaching staff of Champlain College was not a trivial matter for Bishop's because the Champlain staff could affect the decision of many students in selecting a university. Internally, Bishop's decision making structures made it very difficult to reorient the direction of the University after 1971. The faculty was insecure and bitter after the 1971 cutbacks, when its size had dropped from eighty five to about sixty six members. The Administration had wanted to cut the faculty to forty but faculty pressures had gradually worked the number back up to fifty four and then sixty; in actual 143

fact, the total faculty only dropped to about sixty six. This process, however, was a painful one for the University. Empires had been built during the expansion of the sixties, and Bishop's was so small that the debates over cutbacks involved friends and neighbours, not unknown naines and unknown faces. An article in the February 4, 1972, issue of The Campus described a student editor's opinion of the faculty during the cutback debates: An even greater dilemma which we are faced with is within the faculty. Though the following judgment may be harsh, one cari compare Bishop's faculty to scavengers, vultures, or a pack of wolves. Recent firings of professors, elections to Senate, and the allotment of available positions contain ail the drama of pack hunting and dog-eat-dog politicking. The battle unes have been drawn and the leaders have emerged. When one member of either side is found vulnerable, he is liquidated immediately and finally. For each victim someone emerges secure and victorious.11 Reorientation was attempted on a number of occasions. In 1972, the Principal, Denis Healy, at the request of the Chairman of the Executive Committee, Alex Patterson, had prepared a report on the future direction of Bishop's. Healy's report called for the development of interdisciplinary programmes, less specialization (in terms of total credits in any one area), restructuring of the Division of Natural Sciences,

11The Campus, "Thoughts as Bishop's Fights for Life", 4 February, 1972. 144 creation of a School of Business, and other changes. None of these changes were ever passed by the Senate of the University. The failure of the Senate to adopt these changes and the lack of support given ta the Principal by the Executive Committee greatly weakened Healy's position. A faculty member has described the result: Everybody thought it was for the birds. We couldn't go that way. He just became less and less significant. Ultim- ately, he was not running the place.12 Another attempt at reorientation occurred in September, 1973 when the Hackett Committee was formed by the Executive Committee. This committee essentially was set up to re-examine the structure of the University, and after deliberating rec- commended a change from elected ta appointed Departmental Chairpersons and the abolition of elected Divisional Chair- persons--the hope being that a more controlled administrative structure would lessen the difficulties of making changes in the University. The Senate rejected the recommendations of the Committee in December, 1973, and again in March, 1974 after the Executive Committee had invited the Senate ta recon- sider its position. In 1975, another committee, The Education Goals Commit- tee, was set up by the Executive Committee. The Senate of the University objected ta the terms of reference of this

12 Interview with Professor A. 145 group with the result that the Committee was reconstituted with members elected by the Senate. Also, in 1975 the Senate rejected the adoption of the Operation Sciences Fondmentale recommendations concerning the University's science programme instead essentially opting for the status quo. Conflicts between the Principal and certain members of the faculty continued throughout the 1971 to 1976 period. It must be remembered that the faculty, under the revised Rules, Orders and Regulations of the University, had the right to elect six members to the Executive Committee. The result was a Senate which rejected changes, and an Executive Committee where the faculty representatives often were at odds with the Principal; It was this continuous eating away. Every Executive Committee meeting became a marathon thing where faculty members brought up very specific things aimed at the Principal. The Principal was put in the situation of having to sit on a committee with the sanie vote as a faculty member, having decisions thrown back in his face.13 Events came to a head in September, 1975 when the Faculty Council of the University voted a motion of non-confidence in the Principal, after the Principal had refused to carry forward recommendations of the Tenure and Promotions Committee to the Executive Committee. Subsequently, the Principal resigned his position; however, the Faculty Association used the events which had transpired to build a case for unionization and filed

13Interview with Professor E. 146

for certification. 5.4 Constraints On Strategic Adaptation To be able to examine the constraints on the strategic adaptation of an organization it is necessary to specify both the environmental forces affecting the organization, and the changes in strategy which may have occurred to cope with the changed environment. Figures 8 and 9 show these elements in a simple model for both of Bishop's University's major changes in strategy in 1957 and 1971. The earliest strategic period of the University, from 1947 to 1956, could not be analyzed in this fashion because it is uncertain as to exactly what the pre-1946 pattern was. It is certain that the 1947 to 1956 period was one of modernization and the establishment of lay control over the University, but it is difficult to say more than this about this strategic change because neither environmental forces, nor the University's pre-1946 strategies were studied for this research. 5.4.1 Strategic Change - 1957 Two major environmental changes coincided with the break in Bishop's strategic decision patterns during the 1957 to 1970 period; government involvement with higher education increased, and the demand for higher education from graduating high school students went up dramatically. For Bishop's it is evident that both of these environmental forces were positive stimili--they represented opportunities for the Univer- sity. While both of these environmental forces began to emerge

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Re form o f Edu cation - CEGEP Increase d Government Contro l and Plann ing for Partic ipat ive

Re trenchment

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- Del iberate Cl) o p., Reac t ive 151 152

Bishop's was faced with the removal of its collegial equivalent programme and the creation of Champlain College, Lennox- ville. It is evident, however, that many advance signais were given such that the final (eventual)outcome of these environmental changes was relatively clear. From the time of first recommendations of the Parent Commission, it was clear that collegial education would be established and that these new institutions would not be under the control of the province's universities. The relationship of Bishop's, and ail of the province's universities for that matter, with the government had also changed in the late 1960's with increasing present- ations, documentation, and meetings being required to justify the resources being allocated. A second difference from the previous period of strategic change was that the changes made after 1971--retrenchment, emphasis on recruitment, initiation of continuing education programmes, attempts at self-justification--were reactive changes directly brought on by the actions of the government. Redirection was not a matter of choice; Bishop's had no choice in the matter given the abrupt actions of the government. Constraints on the University during this period were both of an external and an internai nature. Clearly, the government policy represented not only the specific causes of Bishop's crisis, but the most significant external constraint in adapting to the new environmental order. New programmes 15 3 had ta be approved on the basis of the government system wide plans, and any reorientation for the University had to meet with government approval. Given government financing, which by 1970 made up 70 percent of the University's operating revenue, Bishop's was very dependent. Yet, on the positive side it should also be noted that within the constraints just outlined Bishop's was still given the freedom to define what it wanted to be. In fact, this demand for a critical self- examination had been made by the Minister of Education, Guy St. Pierre, as early as January, 1970. It was up to Bishop's to reorient itself and prove its viability. The other major environmental change which was noteworthy was the decline of demand for university education in the 1970's. Internai constraints were extremely important in blocking the reorientation of the University. Demands for more democratic decision structures had built up throughout North American universities during the 1960's and Bishop's had not escaped this environmental phenomenon. Faculty and students at Bishop's had been active in pressuring the University for a greater say in the University's decision processes during the 1965 ta 1970 period. The response from the Executive Com- mittee and the Administration had been a complete change in the way decisions were made: elected chairpersons, an elected Senate with clear responsibilities for academic affaira, and faculty and student representation on ail important committees including the Executive Committee. In a very strong sense, 154

Bishop's became a political arena with major posts determined by election, and decisions openly made on the basis of organizational politics and constituency. The administrative structure of the University was extremely thin: the Principal, an Assistant to the Principal who also taught, the Dean, and a Registrar who was not an academic (the Registrar had initially been hired as an administrative employee because he was bilingual). A strong case can be made for the argument that the University overreacted in altering its organizational structures in the 1969 to 1971 period. Ail major attempts to reorient the University failed. The Healy Report died in the Senate; the recommendations of the Hackett Report were not implemented; the Education Goals Committee of the Executive Committee was coopted with elected faculty representatives; and the findings of the external C.S.F. body were rejected. When the faculty members on Senate would waiver, pressure would be forthcoming. It is perhaps not surprising that the faculty were not enthusiastic about organizational changes: these changes would have in many cases reduced their security, perhaps even eliminated their jobs. The majority of the faculty of Bishop's was in areas (sciences, humanities) that would have been affected by reorientation. because of the insecurity of their jobs,were just re- Others ) luctant to give up any hard earned participation rights, especially after the 1971 cutbacks. Given the severity of these internai constraints on 155 strategic adaptation, it is difficult to argue that external constraints, aside from that of government control, were important in restricting the University. The University never got to the point of seriously looking at the advantages and disadvantages of various reorientation options. The major constraints on strategic adaptation after 1971 were as follows: INTERNAL CONSTRAINTS EXTERNAL CONSTRAINTS - past decisions - government control (strong) through financing (strong) - decision making structures (strong) 5.5 Summary This chapter has reviewed and analyzed the strategies of Bishop's University. Three major periods of strategy were found for this organization: 1947 to 1957, a period of modernization then stability; 1957 to 1970 growth; and finally 1971 to 1976, retrenchment. Various environmental forces had impact on the University during the thirty years studied including growth in the demand for university education, government involvement, and most importantly, creation of the CEGEP system and faculty demands for democratic decision structures. Bishop's past decisions, its decision making structures, and government control through operating grants were found to be the most important constraints on the University's ability to adapt to environmental changes. CHAPTER VI

THE SHERBROOKE HOSPITAL

6.0 Background Founded in 1888 by a group of Sherbrooke's most distinguished citizens, the Sherbrooke Hospital has operated as a general care hospital throughout the entire period of its existence. The initial name of the Hospital was the "Sherbrooke Protestant Hospital"; however, in 1914 this name was changed to the Sherbrooke Hospital in recognition of the large number of patients, and staff, who were not Protestants. The original building of the Hospital was opened in 1892 in the City's East Ward, and was later enlarged ta include a separate nursing schooland maid's living quarters. At the beginning of the period of analysis of this study in 1946, the Sherbrooke Hospital was still located in its original building, although plans for a new building had been made. 6.1 Summary Of Strategic Decisions The key decision streams of the Sherbrooke Hospital can be categorized in the following manner: services offered, personnel decisions, physical resources, financing, and external relations. Figure 10 summarizes the important strategies of the Hospital in these areas. Appendix C of this thesis gives complete details of these strategies, and describes

157

FIGURE 10 SUMMARY OF STRATEGIC DECISIONS THE SHERBROOKE HOSPITAL, 1946-1976

Services Full I Rationalized

Doctor Recruitment University of Sherbrook. Informai il Intensive University of Interns Sherbrooke I Montreal Hospitals Foreign

Nursing 1 Increasing School of Nursing Paid I

Type of Personnel Ward Aides / Nursing Assistants

Capital Investment Moderate pansion Unrealized Expansion Expansion Ex ---1 1 Facilities Upgrading

Government Financing (Capital) Heavy Major Investments iL Depencence iReduced

Government Financing (Operating) 1 Indeuendence Heavy Dependence

Government Relations Aggres- Testing Independence Inaction siveness

Formalization University of Sherbrooke Increased 'Support 1 Integration

Other Hosuitals Concern Personal Contact Transition 111111111 ' I " " I I 1 1 1 1 li 1 1950 1960 1970 158

other important events and trends affecting the Sherbrooke Hospital. 6.2 Identification Of Strategic Periods Three significant periods of strategy can be found in Figure 10. The first of these periods was already in progress at the beginning of 1946--the start of this research. It should be pointed out that many of the strategies of the Hospital actually began earlier than 1946; thus, the date of the start of this period cannot be determined. From 1946 until the early 1960'g the Sherbrooke Hospital was a general care hospital maintaining a rather full une of services. The patterns with respect to medical personnel were also quite consistent during this period. Doctors were recruited to the active staff of the Hospital on an informai basis; interns were obtained on a rotating basis from the Montreal General Hospital and the Royal Victoria Hospital; and the Hospital emphasized the development of its School of Nur- sing. A new hospital building was constructed in 1950-1951, and a general period of stability in decisions involving the physical plant of the Hospital cari be seen throughout the 1950's. Financing decisions also followed a similar pattern during the 1946 to 1960 period: government revenues were sought out, but revenues were also encouraged from whatever sources were available. In terms of external relations, the Sherbrooke Hospital emphasized its relationship with the anglophone community and had cordial, yet infrequent, dealings 159 with :the other Sherbrooke hospitals. This period came to an end about 1962. Many of these patterns began to change in the early 1960's with a second strategic period developing. The Hospital, for the first time, began to consider the reduction of services in certain areas. Efforts to recruit full time members of staff were intensified, and foreign interns were increasingly used. Other important changes involved the upgrading of existing facilities and the decision to support plans for a medical school at the University of Sherbrooke. During the first stages of public hospital insurance, the Hospital also made a key decision to supplement government financing with its ovin revenue obtained through community campaigns and other sources. Thus, the case can be made that the strategic decision streams of the 1962 to 1971 period form a common pattern for the Sherbrooke Hospital. Figure 10 also shows a third strategic period for the Hospital beginning about 1971. Obstectrics and pediatric services were dropped during this period, and the Hospital developed a more autonomous and independent stance in its relationship with the provincial government. The Sherbrooke Hospital increased the use of its ovin funds for capital investment purposes, making increased investments in capital assets during this period. Important additions to the Hospital's existing building were made. Finally, between 1971 and 1976 the Sherbrooke Hospital increasingly integrated its activities with the medical school of the University of Sherbrooke. 160

6.3 Description Of Strategic Periods 6.3.1 1946 to 1962, Modernization/Stability Similar to Bishop's University, the Sherbrooke Hospital was in dire need of modernization in 1946. Plans were developed during the War, and by 1947 the Sherbrooke Hospital was involved in activity which lead to the construction of a new modern hospital building and a nurse's residence in 1951. Key decisions of the Hospital during this period were generally concerned with the construction programme, and problems arising from the move into a new, and larger, facility. In particular, the Hospital had a great deal of difficulty in finding adequate nursing personnel to staff the new hospital building. Our Hospital is now fully equipped. It has its full quota of beds for ail rooms. The determining factor in the accommodation of the Hospital now, is the nursing service, rather than the number of beds available.1 1 Intensive efforts were made to promote and develop the School of Nursing during this period with the help of the local community. Other solutions to the nursing problem involved the recruitment of British nurses, particularly in the early 1950's; and the use of nongraduate nursing employees to relieve the nursing personnel of certain responsibilities.

1 "Report of the Medical Staff", Annual Report of the Sherbrooke Hospital, 1952, p.20. 161

Other problems with medical personnel involved the securing of interns. Although a limited number of interns were provided by the Montreal General Hospital, and the Royal Victoria Hospital, other ad hoc arrangements had to be made. This involved the use of a young doctor acting as an intern, or at other times the use of graduate foreign doctors who had immigrated to Canada. The services offered by the Sherbrooke Hospital during the 1946 to 1962 period were complete, and typical of a general care hospital of that era--medical, surgical, children's and maternity wards, physiotherapy, radiology, clinical and pathological laboratories, and an X-ray department. An "Out-Door" service existed but was not initially considered to be important. Clinics were organized in other areas to supplement the Hospital's permanent services: the Psychiatric, Dermatology, and Tumour Clinics being quite important to the community. Significant decisions were also made in other areas during the 1946 to 1962 period. The Hospital's strategy with respect to financing basically involved the search for revenues wherever (and from whomever) they could be found. Government grants were sought for specific capital investment purposes; this being the only way the provincial and federal governments would provide funds. The Hospital, similar to most general care, community hospitals in Canada, was very short of operating revenue 162

during this period. Evidence of this can be found in a number of actions. One was that the Hospital tried to get the maximum amount of funds out of whatever government programmes were available: specifically, Quebec Public Charities and Workmen's Compensation. Throughout the 1950's the Sherbrooke Hospital attempted to abrogate the agreement whereby it did not receive revenue from services performed for the provincial government under the Quebec Public Charities Act; the services supposedly were repayment for government grants in building the new hospital building. In 1958, the Hospital was, finally, successful in this effort. Other evidence of the lack of operating revenue was the "tight" manner in which the Hospital was managed. Between 1956 and 1961, a number of actions were undertaken to increase accounts receivable collections; also, cost control efforts were frequently implemented. By 1955, an Annual Campaign had been established to assist the Hospital in raising funds. The Sherbrooke Hospital did experience some liquidity problems during the late 1950's. The fact that this situation was a structural problem did not escape the Governors of the Hospital, as the following excerpt from the 1956 "Report of the President" reveals: Both statistically and financially, the year end figures again reveal the unending struggle carried on by most, if not ail institutions such as ours to solve the dual problem of service and costs.2

2“ Report of the President", Annual Report of the Sherbrooke 163

External relations with the government and the other Sherbrooke area hospitals were cordial, yet rather infrequent. The provincial government was flot deeply involved in the health care field, and aside from the dispute over the 1951 financing arrangements, few sources of friction existed. In- terestingly, lobbying with the government was not done in Quebec City, but rather with a J.J. Bourque, a local politi- cian who was a provincial cabinet minister. Contacts with the other Sherbrooke hospitals were usually made on a personal level, and it was very seldom that formai meetings were held. The number of specialists in the Sherbrooke area was flot extensive and several of the doctors at the Sherbrooke Hos- pital, in particular Doctors Quintin and McDougall, were consultants at other hospitals. One strategy of the Sherbrooke Hospital was clear. The Sherbrooke Hospital maintained very good relations with the elite of the Sherbrooke anglophone community. While no one decision alone can be used to support this contention, it is evident that this pattern existed. The development of the Campaign organization, the attention given to public relations, and the involvement of various anglophone service clubs with the Hospital ail support this strategy. The elaborate system of titles that existed (for example, Life Members of the

Corporation) show the efforts that were made to create a

Hospital, 1956, p.15. 164 situation where active participation in the affairs of the Sherbrooke Hospital was a sign of status in the English-community. The period following the completion of the new hospital building in 1951 perhaps can best be described as a period of stability and slow growth. Around 2,000 surgical cases were completed per year, and the Hospital had between 430 and 480 births per year. Admissions (patients) showed strong growth rising from 3,022 in 1952 to 4,134 in 1960. The Hospital's occupancy rate also slowly improved during this period increasing from about 65 percent to 80 percent. The only area which grew significantly during the 1950's was the Out Patient service. Starting with only 3,195 cases in 1952 this service grew to the point that 9,439 cases were treated in 1960. Some changes also occurred in the Sherbrooke Hospital's clientele, admitted to the Hospital, during the 1950's. The percentage of the Hospital's clientele who were actually from the City of Sherbrooke dropped from about 40 percent in 1946 to about 30 percent by 1960. Similarly, it appears that the religious affiliation of the clientele changed somewhat with slightly fewer Protestant patients being admitted. Although data is not available with respect to language of admitted patients for these years, interviews indicate that prior to 1959 very few French-speaking patients were admitted to the Hospital. In the Out-Patient Department, however, the percentage of patients who were francophone was substantially 165 higher. Finance problems did affect the Sherbrooke Hospital during the 1950's; yet, because of the Annual Campaign and other measures the Hospital was still in a very healthy financial state. The Hospital's position in the anglophone community was secure, and it enjoyed a good reputation. The fact that the Hospital lost its accreditation in 1960 (for one year) appears to be more a result of complacency then anything else. In any case the reputation of the Hospital was not seriously affected--the accreditation problems stemmed more from lack of committee structure than from problems with the quality of medical care. The personal recruitment of doctors to the staff of the Hospital also had positive effects on the creation of working climate for the organization: We developed an atmosphere there that the Hospital took priority over everything: over your office, over your private practice. Most of our specialty group were returning from the War. We had a common bond, if you will, but also had a real sense of building the place up... There was an "espirit de corps" and we preached this. We are our brothers keepers, and we have got to build up standards with increasing efficiency, and quality of personnel, and keep bringing in new blood. This worked for quite a while...you had to indoctrinate, and work personally with people about this.3

3Interview with a member of the medical staff of the Sherbrooke Hospital, Doctor A, Sherbrooke, Quebec, July 1982. 166

6.3.2 1962 to 1971, A Changed Pattern/New Rules Of The Game Two environmental events dominated the decision streams of the Sherbrooke Hospital during the 1962 to 1971 period: the implementation of Quebec Hospital Insurance, and the establishment of a Faculty of Medicine at the University of Sherbrooke. Both of these changes greatly affected the Sher- brooke Hospital and forced the Hospital to initiate new de- • cision patterns in several areas. Before the implementation of Quebec Hospital Insurance in 1961, the provincial government did not provide any significant amount of operating funds to the Hospital (about 6 to 7 percent through Quebec Public Charities, and Workmen's Comp- ensation); by 1970 about 95 percent of the Hospital's revenues came from the provincial government. In the early 1960's, the Hospital's operating decisions were not greatly affected by these new arrangements: the provincial government exercised more contrai over funds allocated for capital expenditures. Deficits were usually covered by the government ) provided the amounts spent over budget were justifiable and shareable under the plan. Increasingly throughout the 1960's, however, government decisions affected activity in the Sherbrooke Hospital. Changes in the rates paid, methods of payments, or services covered under the Quebec Hospital Insurance determined for the most part, the services the Hospital offered. Clearly, one of the major decisions the Hospital made after the establishment of public hospital insurance was the 167

continuation of the Annual Campaign for public support of the Sherbrooke Hospital's activities. In many ways this was surprising because the Hospital was one of the few hospitals in ail of Quebec with an endowment: Why should the anglophone community continue to support an institution that had just - entered a period where the government had assumed responsibility for financial support of ail similar institutions? In terms of the Hospital's relationship with the government, the pattern seems to be one of trying to establish how the rules of the game had changed. After 1965, when the Hospital's expansion plans had been turned down,a feeling of frustration seems to have emerged. The dependence of the Hospital on the provincial government was clearly evident with respect to building plans and expansion. As early as 1958 the need for additional space to expand certain sections of the Hospital had been noted. Some of the plans developed were elaborate, based on the assumption that the Sherbrooke Hospital should become the medical center for the region. Debate over the need for the proposed Faculty of Medi- cine at the University of Sherbrooke forced the Sherbrooke Hospital to make some critical decisions. Should the Sher- brooke Hospital support the project? What would be the role of the Hospital in the regional system, if the Faculty of Medicine was established? After debate, the decision was made to support the University of Sherbrooke project, and to 168 play an active role in its development: There was a lot of debate. I would say the majority felt that the only way we could get the people we liked was to go along with the University, and get the teaching personnel who would meet their standards. There were some doubt- ing Thomases... We were a bit excited about being affiliated with the University...it would serve our purposes.4 One of the outcomes of this early decision to support the Faculty of Medicine at the University of Sherbrooke was that over the next five years the relationship would develop in a relatively positive manner. Although the process of establishing a formai relationship with the University did create some minor problems, actions of the Sherbrooke Hospital, such as granting hospital privileges to the teaching staff of the University before the Centre Hospitalier Universitaire was built, meant the relationship did develop without mutual resentment--a resentment that did develop between the University and the other two general care hospitals in Sherbrooke: The Sherbrooke Hospital made a deliberate attempt --you know when the Centre Hospit- alier Universitaire first started --to be counted as an ally, and a collaborator, especially in the teaching of students and postgraduate students. LThez7 were right up front supporting it 100%...When the decision was made that there was going to be a Centre Hospitalier Universitaire, they jumped right on the bandwagon. Before that some people were saying the area is too small to support a teaching hospital...gor

4Ibid. 169

many7 it was not the first priority. 5 The establishment of the Faculty of Medicine at the University of Sherbrooke, and eventually the building of a fourth general care hospital in the area (C.H.U.), had other consequences for the Sherbrooke Hospital. One was that government funds would not be available for the proposed expansion of the Sherbrooke Hospital; the creation of a 350 bed university teaching hospital at the Centre Hospitalier Uni- versitaire meant that the area would have an abundance of general care beds. And, of course, even without the surplus of beds, the provincial government only had so much money that could be allocated to health care in the Eastern Townships. Another consequence of the establishment of the Centre Hospitalier Universitaire was the need for some sort of regional planning if duplication of services was to be limited. Thus, from 1965 to 1970 the Sherbrooke Hospital became involved with a number of regional planning committees, and this activity would become more important with the passage of Bill 65 in 1971. Blockage of the Hospital's expansion plans lead to a strategy of altering, and modernizing, the Sherbrooke Hospital's exisiting facilities where practicable. Many projects to upgrade the Hospital's facilities were undertaken, no doubt

5Interview with a member of the medical staff of the Sherbrooke Hospital, Doctor B, Sherbrooke, Quebec, November 1981. 170 assisted by the fact that the Quebec Hospital Insurance scheme did allow for capital investments. This pattern of upgrading within the framework of the existing building continued throughout the 1962 to 1971 period. A doctor who joined the staff of the hospital at that time noted the strategy: What touched me when I first came here as a "G.P."--I really didn't have anything to do with management of the Hospital--was that there was a nucleus of four or five people in the Hospital who were prepared to continue to keep the Hospital right up to date in medical care.6 Nevertheless, it was clear that space problems and frustration over the lack of progress in getting government approval also characterized the 1960's for the Sherbrooke Hospital. Other important decisions were also made concerning personnel around 1963. The number of doctors on active staff became an issue in the early sixties, and more intensive efforts to attract doctors to the Hospital were undertaken. This problem remained for a number of years and became critical around 1970. The recruitment of interns were also a problem in the 1960's and beginning around 1963 the decision was made to increase the use of foreign interns. The closing of the School of Nursing (with the last class graduating in 1971) was also an important decision made during the end of the 1962 to 1971 strategic period. There

6 Interview with a member of the medical staff of the Sherbrooke Hospital, Doctor C, Sherbrooke, Queb.ec, December 1981. 171 cari be no doubt, however, that the Sherbrooke Hospital had no say in this matter, but was merely reacting to a decision made by the provincial government. The trend in North America was to more theory in the training of nurses, and Quebec followed this trend. The number of patients admitted to the Sherbrooke Hos- pital increased throughout the 1960's, peaking in 1968. In 1969, the Centre Hospitalier Universitaire opened and admissions to the Sherbrooke Hospital dropped from 4,343 to 3,698. Births ranged from 450 to 500 per year throughout the 1961 to 1970 period, and the number of operations performed of the Hospital remained relatively stable. While occupancy remained in the 75 percent to 80 percent category in the 1960's, changes to the Quebec Health Insurance plan resulted in a dramatic growth in the Out Patient Department. In 1961, 9,439 patients were treated at the Hospital's Out Patient service, but by 1970, 25,195 cases were handled. Statistics indicate that the clientele of the Hospital began to change during this period. As previously indicated the Hospital had relatively few admissions of French-speaking patients before 1960; however, by 1970, 28 percent of all admitted patients were francophones. The religious affiliation of admitted patients showed that while Protestants still made up 67 percent of ah l admissions, their numbers had dropped from the 80 percent level of the late 1940's. The 1962 to 1970 period did see a stabilization of the trend of 17 2 a decreasing number of admitted patients who were residents of the City of Sherbrooke: Sherbrooke residents averaged about 29 percent of total admissions throughout the period. Two other results of this strategic period are worth noting. The Hospital continued to enjoy the support of the anglophone community as evidenced by the success of the Hospital's Annual Campaign: and the Board and medical staff of the Hospital worked very well together: The medical side and the Board of Directors..that's really the nice thing about this Hospital j have been working in harmony and have adjusted to each others demands-- An extremely cooperative relationship: When the medical staff could justify and point out changes and so on, the administrators and Board of Directors, representing the community were just great.7 7.3.3 1971 to 1976, Growth/Rationalization Of Services The 1971 to 1976 period was an important period of strategic change for the Sherbrooke Hospital. Medicare, and the reorganization of health care in the province under Bill 65 greatly affected the way ail hospitals in Quebec function- ed. The Sherbrooke Hospital made key decisions in a number of areas including the services it offered and its relationships with the government, the University of Sherbrooke, and the anglophone community. Perhaps the most critical change made by the Hospital

7 Ibid. 173 was the decision to rationalize the services it offered, replacing underutilized areas in obstectrics and pediatrics with an Intensive Care Unit, and a Forensic Psychiatric Unit. As early as 1964, the Medical Executive Committee had expressed concern over the rather low occupancy in both pediatrics and obstectrics, both of which often had below 40 percent occupancy. In 1971, these concerns led to the decision to replace the Children's Ward with a modern ten-bed Intensive Care Unit--a much needed facility at the Hospital. This change complemented the Hospital's development in surgery which had been very successful. The catlyst for this decision was an earlier decision not to invest in new, sophisticated laboratory equipment, but rather to send much of this work out to the Centre Hospitalier Universitaire laboratory. A doctor who participated in these decisions described the process that followed: Then we began to think in ternis of that; we looked at our pediatrics: what were we doing? We had mentally deficient patients with chronic constipation lying around; we had behavioral problems that doctors took off mothers. We really weren't doing very much. We had two pediatricians from C.H.U. who came over every day. We said that this was a lot of mullarkey. We cari use this space better--that's when the intensive care came in. We closed eighteen beds and opened up ten. This proved to be very valuable to the community in 1971...We saw a tremendous improvement in our death rate, post op--it was an exciting thing:8

8 Interview with Doctor A. 174

Eventually, the Pediatric Service was closed in 1973, although it effectively did not function after 1971.

A similar process of reducing service followed in 1973 - 1976 period with obstectrics. From 1971 onwards when the decision to participate in the discussions on regional cent- ralization of obstectrics was made, the Hospital gradually moved towards the abandonment of this service. Finally, in 1976, fed up with the lack of action at the regional level, the Sherbrooke Hospital unilaterally decided to terminate its Obstectrics Service. At the saine time.the Hospital decided to establish a Forensic Psychiatric Unit, under Dr. Pierre Gagné, who had established a Psychiatric Service at the Sherbrooke Hospital in 1972. The actions of the Hospital in altering its services represented a more independent and aggressive stance in its relationship with the provincial government. Importantly, the changes made in 1971 were made by the Hospital itself without government approval: We went ahead and built; we did away with the pediatrics ward. 21t was7 in- efficient use of space--we really didn't need. The building of an intensive care unit of ten beds was totally out of line for the norms of a hospital our size. The Government just wouldn't have anything to do with it; we negotiated with the Government for about three years. The only way we were able to put it in was (1) pay for it totally by ourselves, and (2) convince the provincial goverrunent -that it was not going to cost any more by having 175

that unit.9 This sanie more independent approach was taken by the Hos- pital in its 1974 budget dispute with Quebec, and in negotiations over the number of beds that would be maintained after the 1976 closing of obstectrics. This change in approach no doubt was partially due ta the fact that the provincial government, and more specifically the Conseil Regional, were each increasingly using economic criteria to evaluate health care services. The small size of the Sherbrooke Hospital usually meant that the Hospital did not fare well when evaluated with such a framework. Other important decisions made in the 1970's involved the Hospital's relationship with the Faculty of Medicine at the University of Sherbrooke. A definite statement concerning the orientation of the Hospital toward family medicine was made: a statement which had a number of effects, one of which was the recruitment of general practitioners. This action was facilitated by the fact that, when Medicare was insituted, the financial compensation for general practitioners was attractive, and many young Quebec doctors entered general practice: Well, I know that in 1969 there were not many French G.P.'s. What happened was that the trend towards more G.P.'s started around those years when Medicare started and took over payment of services in 1971. Thus, in 1972, 1973, 1974, due to the nature of the agreement that the

9 Interview with Doctor C. 176

G.P.'s were able to get with the Govern- ment...a lot more G.P.'s were graduated... So with the advent of a lot of G.P.'s; some were encouraged to apply to the Sherbrooke Hospita1.10 Bill 65 created a number of problems for the Sherbrooke Hospital. Internally, the regulations of the Bill were both comprehensive, and specific, with respect to how ail hospitals in the province must function: Government intervention has changed the whole profile of the thing. Government legislation had drawn up rules and regulations which govern every aspect of the running of the Hospital right down to the names of the committees, jhe structure7 of the medical staff, the duties of the Chiefs of Service, and the number of meetings per year. There was a reaction to this, sure; but they pay the tune.11 While the regulations under Bill 65 were comprehensive, the actual functioning of the Sherbrooke Hospital did not change very much because most of the requirements were requirements the Hospital had to meet for accreditation purposes in any case. At the Board level, however, Bill 65 did provoke an important decision for the Sherbrooke Hospital--the establishment of the Sherbrooke Hospital Foundation. It is clear that by 1971 the Hospital had decided that it must act autonomously wherever possible, and that one of the preconditions to this

10Interview with Doctor B.

1 lIbid. 177

strategy was the availability of an independent source of financing which could be used when required. Bill 65 threatened this strategy in at least two ways: the make up of the Hospital's Board was no longer under the control of the Hos- pital's corporation, and the possibility existed that the anglophone community would no longer fund the Hospital to the saine extent that it had in the past. The anglophone elite of the Eastern Townships which had contributed a great deal to the success of the Hospital was no longer guaranteed control of the Hospital's Board after Bill 65: We felt that the high quality of directors we had in the past might not be maintained ecause of7 the fact Government 27oule decide their going to put in so and so. It seemed in their wisdom jhe Government7 they were weaken- ing the strong set up we had before with7 volunteers in the highest sense... not7 there to serve somebody else LUther than the Hospita1.12 Additionally, there was also the fear that, because the anglophone community would no longer be able to control the Hospital, donations and contributions might stop: Why should individuals contribute ta a state controlled hospital when other hospitals of a similar nature were 100 percent financed by the provincial government. If the Sherbrooke Hospital lost its identity as an anglophone institution, it would not make

12Interview with a former President of the Sherbrooke Hospital, Lennoxville, Quebec, August 1981. 178 much sense to contribute to it--especially if the funds already given could not be protected. The solution to this problem was the establishment of the Sherbrooke Hospital Foundation which could be controlled by the anglophone ente: jhe establishment of the Foundation7 was in response to Bill 65 too because we, as a Hospital, were very heavily endowed, and it was felt necessary to protect the funds in case of a total takeover. A foundation was created with Mr. Simons as the President; he was President of the Hospital and the Foundation. We were not allowed to transfer ail the funds, some had to stay.13 The 1971 to 1976 period was one of greatly increased activity at the Sherbrooke Hospital. Admissions rose from 3,798 to 5,339; out patient activity continued to increase from about 25,000 cases in 1971 to 43,000 cases in the mid-1970's; and the 1971 changes to the Hospital's surgical theatres permitted a 20 to 30 percent increase in operations to take place. Occupancy averaged about 70 percent from 1971 to 1975, but jumped to 80.5 percent after the Obstectric Service was closed in 1976. Other changes involved the Hospital's clientele. The percentage of admitted patients who were francophones, went from about 23 percent in 1971 to about 37 percent for the 1974 to 1976 period. The religious affiliation of patients admitted showed that the number of Protestants continued to decline,

13 Interview with a former employee of the Sherbrooke Hospital, Lennoxville, Quebec, July 1981. 179 dropping from 64 to 53 percent between 1971 and 1976. One trend was reversed at this time: the percentage of the Hospital's admitted patients who were from the City of Sher- brooke increased to 34 percent--a level which the Hospital had not experienced since 1959. In terms of community support the Sherbrooke Hospital continued to enjoy strong financial backing. A large amount of money was raised during the 1970's as the following 'figures indicate:

1970 $ 99,347 1971 91,419 1972 96,999 1973 117,899 1974 147,276 1975 120,334 1976 126,266 These amounts were higher than those raised in earlier campaigns, with the exception of the Building Campaign of 1949 to 1951. Nevertheless, other types of anglophone support diminished because of Bill 65 and the collective agreements negotiated with the Hospital's unionized employees: The English establishment has dwindled. I would say that the English establishment for the Hospital has dwindled, but it has dwindled because of the representation on the Board. Those things that were easily accomplished years ago are now frustrated through bureaucratic regulations. And also volunteer work, employees fear volunteer work as a threat to their own positions. There are still people who would like to do things, but it is not welcomed 180

in many instances. 14 Postscript As described in Appendix C of this paper, the Sherbrooke Hospital continued to have a great deal of support in both the anglophone and francophone communities. In 1978, the Hospital was able to organize a massive campaign to petition the Minister of Social Affairs to allow the Sherbrooke Hos- pital to continue as a general care hospital, after the Conseil Regional had recommended conversion of the Hospital to a psychiatric hospital. The Minister acceded to this request. 6.4 Constraints On Strategic Adaptation A review of the strategic decision streams of the Sherbrooke Hospital reveals that two important strategic changes took place during the 1946 to 1976 period. These changes, along with the environmental forces that precipitated change are described in Figures 11 and 12. Similar to Bishop's University, it is difficult to say much about the origins of the first strategic period found in this study (1946 to 1962) because its starting point is indeterminent. 6.4.1 Strategic Change - 1962 The Sherbrooke Hospital's first strategic change came after a relatively long period of stability. After the

14Ibid.

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completion of the new hospital building in 1951, very few major changes took place in the way the Hospital operated. A second point that should be noted is that change in strategy happened very slowly, and it is difficult to establish the date of the start of this period. Three environmental forces contributed to the 1962 to 1964 change in strategy. The first was the increased involvement of the Quebec government in the health care field with the establishment of Quebec Hospital Insurance. For ail hospitals inihe province this meant that the provincial government became the major source of operating and capital investment funds: the latter being of more importance in the decisions of the Sherbrooke Hospital in the 1960's. Hospital expansion in Quebec was closely watched by the provincial government; clearly this was because Quebec would be funding increased beds and services, through operating grants in the form of Quebec Hospital Insurance. Attempts by the Sherbrooke Hospital to have its expansion plans appi-oved in 1962 cari be contrasted with 1947 when the provincial government was asked to contribute to the Building Campaign--the decision to build already having been made. Interconnected with this government involvement was the creation of C.H.U., and the Faculty of Medicine at the Univer- sity of Sherbrooke. This event was by far the most significant event affecting health care in the Sherbrooke area during the 1946 to 1976 period, and it had a strong impact on ail 183 subsequent strategic decisions of the Sherbrooke Hospital, and other hospitals in the area. Specifically, the establishment of the Centre Hospitalier Universitaire had the effect of blocking the Sherbrooke Hospital's plans for major expansion, and of forcing the Hospital to define its role in the Univer- sity's network of affiliated hospitals. In fact, the need for ail Sherbrooke area hospitals to define their roles meant that regional health care planning was essential. Other environmental factors which were important in the early 1960's involved changes in the way medicine was practised, particularly with respect to children's diseases, and changes in the supply of professional personnel. Beginning at about this time, the Sherbrooke Hospital started to have trouble attracting both doctors and interns to its staff. With the exception of the trends in the practice of medicine and medical personnel which evolved slowly, the process by which the environment impacted the Sherbrooke Hos- pital was abrupt. While rumours and speculation preceded the establishment of Quebec Hospital Insurance ) the specific date the plan would go into effect, and specific details concerning the extent of coverage, came rather suddenly. A similar process took place with respect to the Faculty of Medicine at the University of Sherbrooke. The establishment of public hospital insurance could be projected into the future to see that government involvement and control over health care would increase. However, the consequences for 184 the Sherbrooke Hospital were flot easy to predict. The eventual outcome of the creation of the Medical Faculty was on the other hand uncertain, both with respect to how the Medical Faculty and eventually the Centre Hospitalier Universitaire would develop, and with respect to the impact on the Sherbrooke Hospital. Interviews and other documents clearly show that both of these environmental changes were perceived to be opportunities for the Hospital as well as sources of potential problems. The adaptation of the Sherbrooke Hospital to these environmental changes involved a number of different decision areas. A decision was made to encourage and participate in the University of Sherbrooke project; new strategies of upgrading facilities and equipment and reconsidering existing services were introduced because of government involvement leadtng to blocked expansion plans; and faced with shortages of doctors and interns on staff, the Hospital changed the way it recruited both types of personnel. The type of strategic actions that the Sherbrooke Hos- pital took in the early and mid-1960's differed depending on the stimuli. Certainly, those of the Hospital's moves which were prompted by government involvement were very reactive. Little debate took place on the issue as to what to do when the provincial government turned down the Hospital's expansion plans in 1965. The action taken seemed to be one of making the best out of the situation, and not to move too far to 185 offend the Government. It appears that because government involvement in health care was a relatively new phenomenon at that time, with uncertain rules of the gaine, the Hospital decided to take a wait and see attitude. Yet, the Sherbrooke Hospital did act proactively in supporting the University of Sherbrooke project. Debates did take place, but surprisingly there were relatively few political interupts. Key individuals on the Hospital's medical staff supported the pro ject, and their influence (and power) assured that the decision was supported. Uncertainty did exist with respect ta the Faculty of Medicine, but it was clear that the Sherbrooke Hospital would have a chance ta influence future decisions. A final point with respect to the important strategic changes made by the Hospital during the 1962 to 1971 period was that decisions did not evolve because of lack of action or indecision. Issues were discussed, options were looked at, and strategic decisions were consciously taken. Constraints on the strategic adaptation of the Hos- pital were bath internai and external. Clearly, the dominant limiting factor during the 1962 period of strategic change was government control. Without government support the Hospital did not have the funds ta expand or make other important changes. Internally, another constraint also existed in the form of the Sherbrooke Hospital's image in the anglophone community. The Hospital had built up a solid reputation 186 in the Sherbrooke area, and had strong financial and other support from the anglophone community. Any action which would weaken this support--such as the reduction of community services, or the lessening of the English identity of the Hos- pital -- could be very costly. These constraints are outlined below:

INTERNAL CONSTRAINTS EXTERNAL CONSTRAINTS

- the Hospital's - government control identity (moderate) (strong) 6.4.2 Strategic Change - 1971 A number of important changes took place in the environment of the Sherbrooke Hospital in the late 1960's and early 1970's. Government control increased dramatically with the introduction of Medicare, and the passage of Bill 65; ahl aspects of health care became regulated and under the control of the provincial government. Also, regional health care planning became more formalized with the creation of Conseil Regional (CRSSSCE). For the Sherbrooke Hospital this meant that regional planning activities had to be watched even more closely than the ad hoc committees of the mid-1960's; the Conseil Regional now, on paper at least, assumed a great deal of responsibility and its decisions could drastically affect the Sherbrooke Hospital. (This, of course, was what happened during the 1978 incident). The practice of medicine, and the supply of professional medical personnel also continued to change during this period. The rate of technological change after the mid-1960's increased

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Sta CI) 1--s o P-1 cr) ri-1 188 substantially in the medical field, particularly with respect to monitoring and diagnostic devices. For the Sherbrooke Hospital, this had the effect of making it very expensive to maintain up to date facilities; the Hospital was forced to choose within the framework of a general care hospital, those services in which it wished to concentrate. Medicare also greatly affected the incentives for young doctors to specialize, thus, the supply of general practitioners increased. Additionally more doctors were graduated, particularly in the Sherbrooke area with larger medical classes at the University of Sherbrooke. On the nursing aide, the change to CEGEP-trained nurses caused few problems for the Hospital, aside from a higher total payroll for nursing services. A final environmental change was the decline of births in Quebec as the full effects of birth control developed. Surprisingly, while the regional decline in births was noticeable in the Sherbrooke area, deliveries at the Sherbrooke Hospital did not really decline. However, the Medical Exec- utive Committee was anticipating a decline and acted on the assumption of decreased births in the future. The processes by which these environmental changes had impact on the Hospital were rather similar. Ail of these changes evolved gradually and their final outcomes were relatively well known. The consequences of each of these changes were, on the other hand, difficult to ascertain with regard 189 to their potential effects on the Hospital. In comparison with the environmental changes the Hospital faced in the early 1960's, there was, however, a much greater degree of certainty about where the environment was heading after 1968. The case that the Sherbrooke Hospital's actions were proactive in response to these changes cari be made. Part- icularly noticeable was the Hospital's approach to the services it offered, and its willingness to act unilaterally using its own funds where necessary. Other changes in its strategic decision pattern at this time were the result of actions taken earlier: the Hospital became more closely integrated with the University of Sherbrooke, and more of its attending staff were francophone. Decisive action was taken by the Hospital in rationaliz- ing its services. There was little debate and few political, or other interupts, in the decision process. Aiding the strategic change process at this time was the fact that little change had taken place in the Hospital's key coalitions from 1960 to 1976, both on the medical side and at the Board level. When delays in getting authorization for the changes the Hospital wanted to make occurred, unilateral action was taken. Interestingly, it appears that a "snowballing" effect took place whereby the taking of one decision lead to another, and then another. Certainty in the environment was an additional factor contributing to change. Little diagnosis took place immedia- 190 tely before decisions were taken; pre-diagnosis seems to have taken place such that the Hospital knew what had to be done. This pre-diagnosis also enabled the Hospital to take advantage of environmental trends and opportunities, namely the establishment of a Forensic Psychiatric Unit, and an Intensive Care Unit. Constraints on the strategic adaptation of the Hospital were again of two types during this period. Externally, government control through financing, and competition from other hospitals limited the Sherbrooke Hospital's freedom. Never- theless, even after Bill 65,constraints arising from the provincial government must be interpreted as being only moderate in strength--the Sherbrooke Hospital did take actions which led to strategic change. This process was made possible by the independent sources of funds the Hospital was able to obtain. Competition form other Sherbrooke hospitals became more important in the 1970's. With the creation of the Centre Hospitalier Universitaire, the area had comparatively more general care beds than other parts of Quebec; and of course, occupancy determined the type of operating revenues individ= ual institutions received. To a certain extent, it is clear that the Sherbrooke Hospital was able to coopt some of the potential effects of the establishment of a university hos- ital in the area by its early decision to participate in the venture. It was not that the potential direction of the 191

University's actions were greatly influenced by this decision, but rather the fact that the Sherbrooke Hospital shared in some of the benefits of the university system. Internally, the major constraint on the Hospital again appeared to be the Hospital's past decisions which were successful in establishing a clear identity. The success of the Sherbrooke Hospital in taking action to rationalize its services, and upgrade its facilities, in the face of potentially heavy government constraints was due to its access to an independent source of financing in the anglophone community. If the Hospital's identity changed to the extent that this support was bat, its strategic freedom would have been greatly reduced. To summarize, the constraints on the strategic adaptation of the Sherbrooke Hospital during the 1970's were: INTERNAL CONSTRAINTS EXTERNAL CONSTRAINTS - the Hospital's past - competition from other decisions and identity Sherbrooke hospitals (moderate) (moderate) - government control (moderate) 6.5 Summary In this chapter, the strategies of the Sherbrooke Hos- pital were reviewed and analyzed. Three significant periods of strategy were found in the decision streams of the Hospital. From 1946 until 1962 the Hospital first modernized and then operated in a rather stable fashion. In 1962, this pattern changed and the Sherbrooke Hospital made a number of signif- 19 2 icant changes including the decision to participate in the project to have a Faculty of Medicine at the University of Sherbrooke. A final period of growth and rationalization of services began in 1971. The nationalization of health care, changes in the technology and practice of medicine, and the establishment of a university hospital in the Sherbrooke area were the most significant environmental changes which had impact on the Hospital. Government control, and the Sherbrooke Hospital's strong identity as an English-speaking community hospital were clearly the major constraints on the strategic adaptation of this organization. CHAPTER VII

ThŒ SHERBROOKE RECORD

7.0 Background Founded in 1897 by Leonard S. Channel the Sherbrooke Record incorporated the Sherbrooke Gazette (established in 1837) and the Sherbrooke Examiner (established in 1897), and until the dropping of the Saturday edition in 1968, the Record had published six days per week from 1897. Alfred Wood purchased the paper on February 1, 1930, and acted as its editor and publisher until his death on Christmas Day, 1935. From 1936 until 1968 the Record was owned by either John Bassett Sr., his son John Jr. (later owner of CFTO-TV, Toronto and a founder of the CTV Network), or Bassett, Jrs. other well known newspaper entity the Toronto Telegram Pub- lishing Company. In June, 1968 the paper was sold to two local Sherbrooke people (Progressive Publications), one of whom, Ivan Saunders, had been active in the affairs of the Record since 1944. On June 30, 1969 the paper was once again sold, this time to a group headed by Conrad Black, son of Canadian brewery mogul George Black. 7.1 Summary Of Strategic Decisions The various decision streams of the Sherbrooke Record 194 can be presented in six major categories: commercial printing strategy, editorial and news content strategies, distribution strategy, revenue and subscription strategies, production and fixed asset strategy, and management contrai strategies. Fig- ure 13 presents a summary of these decision streams for the period 1946 ta 1976. Full details of the major decisions taken by the Sherbrooke Record along with important environmental trends specifically affecting the organization are developed in Appendix D of this thesis. 7.2 Identification Of Strategic Periods From Figure 13 a number of periods cari be inferred. The first break in the overall strategic pattern occurs about 1951. The beginning of this period is indeterminant in that this study only covers the period beginning in 1946. Advert- ising rate strategy, local editorial content, the management control system, and the commercial printing strategy ail changed around 1951. On the whole, this period seems ta be rather stable. The next period which cari be inferred begins in 1951 and ends around 1969. During these years The Record expanded its commercial printing operations, increased local editorial content, and increased advertising rates moderately. In addition, for most of this period, the management control system increasingly became more formalized, and The Record received direct editorial subsidization from the Toronto Telegram Publishing Company. This pattern breaks slightly in 1962 with

FIGURE 13 SUMMARY OF STRATEGIC DECISIONS THE SHERBROOKE RECORD, 1946-1976

Commercial Printing Moderate Expansion

Local News Emphasis

Lowere Increasing * Reduced

Editorials Packaged

News Coverage

Comprehensive Reduced

Size of Editorial Staff Reduced Large r- 1 Editorial Resources Direct Inexperenciec Indirect Subsidization Support Staff

Home Delivery Expansion Advertising Content Greater Less Than 45 e Than 45 % Reinvestment Capital Investment Liquid- ation Slow Modernization

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Advertising Rates

Aggressive Pricing Stability Moderate Inc-"easps Subscription Pricing Frequent Small Relative Stability Increases

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1950 1960 1970 196 the commercial printing strategy basically going into a holding pattern, and the termination of direct subsidization of editorial staff from Toronto. Subscription pricing strategy also changed around 1962 with a new strategy of frequent small increases being identifiable. Perhaps the most obvious feature which emerges from Figure 13 is the break in almost ail strategies of The Sher- brooke Record in 1969. The Record eliminated its press, the quality of news coverage of the newspaper was reduced, less resources were allocated to the editorial side; also, more aggressive policies can be seen in advertising content, advertising pricing, and in the management contrai system. The home delivery expansion programme seems ta end in 1969 as well. The final period which emerges from our analysis of The Record's strategies is 1973 to 1976 with a renewed period of modernization of fixed assets, a moderate expansion into printing, and an increased use of packaged editorials. 7.3 Detailed Description Of Strategic Periods 7.3.1 To 1951 Stability and Tranquility The immediate postwar years emerge from this study as a period of stability and tranquility for The Sherbrooke Record; few, if any, major changes were made in the overall strategy of the paper. Given that John Bassett, Jr., the key figure of this period, had just returned from the War, it is not surprising that this period was a rather stable one for 197 the newspaper. The Bassett era begins in October, 1936, when John Bassett, Sr., of Montreal, president and a large shareholder of the Montreal Gazette, purchased The Record. It appears that Bassett, Sr., purchased The Record for two reasons: first, to give his son John, Jr. a vehicle to learn the newspaper business; and secondly, to have a situation to fall back on if The Gazette folded and his position at that paper disappeared. Upon his graduation from Bishop's in 1937, Bassett Jr. went to Toronto, and The Globe and Mail, to learn the newspaper business so that he would be able to take over the management of The Record. He stayed in Toronto until the outbreak of the War. During the War years while John Bassett, Jr. was in the Army, and for that matter from 1936 on, The Record was operated by individuals appointed by Bassett, Sr.. Ivan Saunders, who was sent down from The Gazette to manage The Record in 1944, describes the administrative system at that time: I went there in June, 1944, at the request of his father. John was in the Army with the Seaforth Highlanders and he was in Italy. lis C.O. was killed and at the request of his father I went down to Sherbrooke because things were not going well and he was quite concerned. They had a sort of editor-manager- vice president, as he was called, who was drinking quite a bit.1

1Interview with Ivan Saunders, former general manager, president, and owner of The Sherbrooke Record, Lennoxville, Quebec, July 1980. 19 8

This practice of sending someone from another organization owned by the Bassett's was followed on a number of occasions during their period of ownership, particularly with respect to editorial staff. The paper Saunders found in 1944 was in poor shape. While it was making money, the profits were more a result of the circumstances that prevailed at that time (there was a great deal of war time public relations advertising, because firms had cash with which they could do nothing else) than the acitivities of The Record. When the War ended in 1945, Bassett, Jr. was brought home early to run as the Conservative candidate in the June, 1945 federal election. Although he lost the election by 3,394 votes (campaigning in kilts was hot the best way te win the hearts of the French-speaking voters of Sherbrooke who were rather anti-conscriptionist), Bassett carried himself well during the campaign, and made ample use of The Record as a vehicle to get his message across. It is not clear whether Bassett, Jr. spent years 1945 to 1948 in Sherbrooke by choice: was he settling down to give running the family paper a try after learning the business in Toronto, and serving in the War; or was he forced to stay in Sherbrooke for a while after having been brought home early ta run as the Progressive Conservative candidate in the 1945 general election? Whatever the reason, we do know that Bassett spent these years enjoying his young family without spending an inordinate amount of time on the day ta day operations of 199 the paper. Bassett's administrative style incorporated rather loose control techniques, and relied heavily on the delegation of authority and a formai chain of command. While he was in essence an owner/manager, none of the usual traces of tight personal control of an organization, normally associated with owner/manager enterprises can be found. Nevertheless, he did undertake certain actions which later helped The Record in the 1950's. First, he renegotiated the very high interest rate at which the paper had been financed (7 percent), and was able to obtain a more favourable rate of about 6 percent. The family had initially put up a very small amount of money to purchase the paper (about $5,000), and thus the paper had been hard pressed to meet the high interest payments during the War years under his father's ownership. Secondly, he was able, with the various Toronto contacts, to increase The Record's number of national advertising contracts. Finally, Bassett, no doubt with the support of his father, persuaded Ivan Saunders to stay at The Record thus strengthening the business side. In addition, Doug Amaron, a talented editor, was hired. In the fall of 1948, Bassett left for Toronto, and a position in advertising at The Toronto Telegram, leaving the affairs of The Record in the hands of Saunders and Amaron. Saunders was made general manager of The Record in 1948, and 200

Amaron, as editor, took care of the news side. Although Bassett maintained his interest, both financial and other, in The Record, the day-to-day administration of the paper really remained in the hands of his professional managers in Sher- brooke. In terms of the administrative system used, the years 1946 to 1951 are very similar. Other aspects of The Record's overall strategy were also quite stable. The organization continued to function strictly as a newspaper with no major movement into commercial -printing operations. While the decision was made in 1949 to print the Town of Mount Royal Post to use up excess capacity, real commitment to a diversification into commercial printing did not corne until 1951. Editorially, The Record continued to offer good local, national, and international news coverage throughout this entire period. Movement to expanded carrier delivery service, which had started in 1944, continued during the late 1940's with home delivery being extended to Stanstead, Thetford Mines and Waterloo. Increases in the price of the paper were made in 1946, 1947, and 1948; however, these increases represented, not a change in pricing strategy towards a new more aggressive stance, but rather a catch up on cost increases of the War years. Advertising and production decisions also reflected few major changes during this era. A national advertising manager was appointed to deal with the Toronto advertising agencies, indicating the importance of these accounts to The Record at 201 that time. Many small English-speaking businesses still existed in Sherbrooke and advertised in The Record; although the area still did flot have a major local advertiser. Reviewing other quantitative data one can see that the 1946 to 1951 period cari be considered as a unit. The Record's average daily size remained at about thirteen and a half to fourteen pages until 1951, with the average weekly size, indicative of advertising revenue, being in the 81 to 95 page range for the entire period. Circulation of the paper varied by only 265 for the five year period: 1946 - 9,310 1947 - 9,166 1949 - 9,221 1950 - 9,431 1951 - 9,316 No major changes took place in any of the strategic decision streams during the 1946 to 1950 period. Stability and tranquility characterized the strategic decision streams of the paper, and this pattern did net change until 1951. 7.3.2 1951 - 1969 Seeds Of Change A number of events took place during the 1951-1969 period which, in retrospect, must signify a breaking away from the stable pattern of the immediate postwar years. Two management actions in particular mark pronounced changes in important decision streams: the movement into commercial printing activities, and the abandonment of national and local advertising rates in favour of a flat Une rate. In situating these decisions, it is important ta review other aspects of The Record's environment during this period. 202

Perhaps the most significant event affecting the paper was the purchase of The Toronto Telegram by John Bassett, Jr. in 1951. Obviously, while Bassett did remain as owner of The Sherbrooke Record, and thus was interested in The Record's affaira, the paper could no longer occupy the same level of importance to him--The Telegram was just so much larger, representing such a substantial investment. From this point on The Record began to fall under the influence of Bassett's financial staff in Toronto. Now, the paper flot only had to justify its existence to Bassett who had personal reasons (a Sherbrooke background, and family connections) for maintaining his ownership, but also to the financial staff of The Telegram as well. Other events also contributed to this changing pattern. In 1951, postal rates increased, and The Record correspondingly increased mail subscription rates, not once, but twice during the year. The result was devastating, as the total circulation dropped from 9,316 to 8,085 (1952). This drop in circulation had a number of consequences. One was that it convinced Ivan Saunders, and Bassett as well, that the prospects for expansion in The Record's traditional product market, that is, a newspaper for the English-speaking Township region, were limited. While expansion of the home delivery service went on right through this entire post 1951 period, it was evident that total subscriptions would never grow much beyond 10,000, if that, and subscription and advertising revenue 203 would be limited accordingly. Advertising revenue problems also resulted in a significant change in strategic direction. Difficulties in en- forcing a step-structure for advertising rates, and the growing strength of advertisérs relative to that of The Record, made it clear that The Record would no longer be able to have as much control over its own rates. Market forces outside of the paper's influence would dictate the growth curve for advertising revenue; and there was flot very much The Record could do about it. Again, the need to expand into other products (printing etc.) was clear. The decision in the early 1950's to go to a flat rate is extremely significant. It signifies to an increasing extent, the acceptance of the changing power relations in The Record's markets; and as well, a recognition that other avenues of revenue generation had to be developed, if the organization was to remain prosperous. Thus, The Record made tentative steps to diversify by moving into commercial printing in 1951. This decision, taken by Ivan Saunders, was made with the support of Bassett, Sr. who always felt that a strong independent newspaper must have a solid printing business as a sideline. "...there must be a sound backstop, a printing business, to publish a strong and independent newspaper", were the words used by John Bassett's father in an interview he gave to Ken McTaggart on how to run a newspaper. Ivan Saunders has described other reasons behind this 204 diversification in the following way: ...the printing business took a lot of time, but I thought we were kind of stymied as far as other businesses were concerned. We had built up a fair size advertising department because we had to pound the streets for local revenue - $15 here, $10 there. What Sherbrooke was at that time °or newspaper advertising revenue7 was a maze of small stores, and it was the only city of its size in Canada without a major department store.2 The Record also had excess capacity available at that time. Another problem for The Record during this period was the growth of elctronic media. Advertising dollars began to shift to radio and television during the 1950's, and the amount of national advertising dollars spent on newspaper grew rather slowly. Later in the 1950's other signais appeared that indicated that the existing way of doing things would eventually have to change. The Sherbrooke Record had been very fortunate in acquiring the services of Doug Amaron--an editor of high caliber. In fact, at Bassett's insistence, the entire news operation offered a product of surprising high quality (for such a small operation) in the late forties and early fifties. However, rising costs and relatively stable revenues meant that this state of affairs could not continue indefinitely. Amaron's decision to leave (because of Bassett's refusai to offer more money) was certainly a forerunner of things to

2 Ibid. 205 corne. The stop-gap measure of sending personnel down from The Telegram, with subsidized salaries, makes clear the nature of the problem. In the long run, a newspaper is only able to offer the quality of news service that its revenue generating ability cari support--no matter how efficiently it is managed. Other quantitative indicators also reveal the changing nature of The Record's situation, and its strategy. Until 1951, the average daily size of the paper had been about thirteen and a half, to fourteen pages. In 1951, the size in 7 creased to the fourteen to fifteen page range, before dropping in 1960. The average weekly size, indicative of advertising revenue, also increased and stayed above eighty four pages until 1961. After the 1952 drop, the newspaper's circulation again began to increase peaking in 1961. The period 1962-1967 for The Sherbrooke Record is notable, not so much by a pattern which shows a great deal of activity and change, but rather by the actions which were not taken during this time period. When taken as a whole, this period clearly shows a pattern of declining interest on the part of John Bassett, Jr. in the affairs of The Sherbrooke Record. Bassett's declining interest had many consequences for the paper, and is identifiable in a number of The Record's strategic decision streams. This pattern begins in 1962 with the strike of twenty of The Record's employees who were seeking higher wages, a 206 reduced work week, and other security of employment concess- ions. Represented by La Federation Canadienne de l'imprimerie et de l'information, a C.N.T.U. affiliate, the strikers apparently were motivated by a fear that The Record's purchase of a rotary offset press for the commercial printing business might somehow eliminate many of their jobs in producing the newspaper. Unfortunately, the major effects of the strike were not limited to higher labour costs, but rather the loss of two of The Record's major clients for printing services. The Town of Mount Royal Post and some of the circular accounts (United Stores) left The Record, when they were forced to sign five year contracts with other printers, during the strike period. This strike was significant in two different ways: the first being its economic consequences for The Record--the loss of two major clients; and the second being the fact that it marked the first, and only, instance of The Record being directly affected by labour militancy. The Record never really recovered from the permanent loss of revenue induced by the strike, and the loss of this revenue did nothing to sustain Bassett's interest in the paper. From 1964 to 1968 the paper lost money, albeit small amounts of about $4,000 to $5,000 per year. These losses, no doubt, provided ammunition for the financial staff people at The Telegram who advocated divestment of the Sherbrooke operation. Again it should be stressed that during the 1962 to 207

1965 period no evidence can be found of major decisions to recapture The Record's former financial health. In fact, around 1963, Ivan Saunders advised Bassett that the paper did not have a bright financial future and should be sold. Bassett's reply was that The Record would go on forever; yet, he made no real effort to insure the future of the paper until 1967. Saunder's recommendation, perhaps, was based on the realization that the market for an English-language, minority paper was becoming smaller. The English-speaking population was either diminishing, or at least stagnating in The Record's traditional markets, and the forces of growing nationalism in Quebec were beginning to emerge. The leaders of The Record's union movement had joined the paper after having worked at the French-language paper, La Tribune. One can presume that these individuals brought with them a different attitude towards labour/management relations, not seen before at the "family oriented" Record, with its folksy atmosphere. Other evidence supporting the case for this period being a period of declining interest on the part of Bassett can also be found. Editors, with their susidized salaries, were no longer sent down from The Telegram. Most importantly, however, is the change in The Record's reaction to the forces in its environment. The lack of strategic response to the devastating effects of the 1962 strike on revenue marks a distinct change. It appears that no major efforts were made to increase the revenue base until 1967. The words of a Record employee 208 at that time describe his impression of the result of this action: They lost money when they should have gone into offset. Saunders had everything set up for offset--they had the equipment and everything else. Had Bassett listened to Saunders at the time they had the strike, they would have been riding high in the hog. They never would have gone down. Saunders had this ail organized ready ta go,Bassett pulled the plug... Then, of course, he 2Uassett7 decided to go offset at the wrong time, and Saunders said this iS nothe time.3 What is also noteworthy during the 1962-1969 period is the growing direct interconnections of strategy, environmental factors, and results. The effects of the Quiet Revolution, and a low growth (or even declining) market, were beginning to be felt. The average weekly size of the paper started a period of decline in 1963 which continued until 1972. Sim- ilarly, the average daily size of the paper, which in the 1951 to 1959 period had always been above fourteen pages, now dropped below fourteen pages for the balance of this period. Audited paid circulation, which had fallen in 1952 and then climbed throughout the fifties, peaked in 1961 and began to decline in a moderate way. In 1967, the decision was taken by Bassett, and The Telegram board, to purchase a new Goss offset press. On the surface this decision seems to contradict the pattern of

3Interview with Employee A, a former Sherbrooke Record advertising manager, Lennoxville, Quebec, June 1981. 209 disinterest revealed during the 1962-67 period. Yet, the pattern of disinterest is not broken, if the details of this specific decision are examined. In other words, a counter in- tuitive explanation of this decision is perhaps more valid in this instance. It could be argued that this major investment decision should never have been made (objective evidence would support a decision flot ta invest in The Record), and was only made because Bassett was unwilling ta give the newspaper any attention. The day the decision to purchase this new offset press was announced was also the day Bassett announced that he was divorcing his wife, so that he could marry a younger woman. Bassett's first wife, an Eastern Township's native, had always been a very strong link connecting Bassett with the Sherbrooke area. As Ivan Saunders has noted, the announcement of Bassett's divorce was very significant for the paper: What we didn't know at the time was that The Telegram was losing money. The day, at the annual meeting that we voted to buy the new Rress, was La1s27 the day he jassett/ announced that he was going ta divorce his first wife. That was the clue ...his interest was finished...he only came down once after that...4 If the approach Bassett used with The Record had been strictly a business one, then The Record might very well have been sold in the mid-1950's. The emotional level seems ta be as useful, therefore, as the profit level in understanding

4Interview with Ivan Saunders. 210

Bassett's attachment to the paper. Given Bassett's other enterprises (e.g. C.F.T.O. it is difficult to imagine that more profitable returns could not be found for the capital tied up in The Record in the late 1950's and early 1960's. Final evidence that the purchase of the Goss press represents Bassett's declining interest in The Sherbrooke Record, and not a new commitment to the organization, cornes from John Bassett's susequent actions. In 1968, less than one and a half years after the decision to modernize The Record was made, Bassett and The Telegram Publishing Company abruptly sold The Record. At a more profit-oriented level of analysis, it should be remembered that the new press had been designed with an eventual transfer to Toronto in mid i perhaps gaining the support of the financial staff at The Telegram in Toronto because of this possibility. The Record's modernization programme included a number of elements; the purchase of a new Goss press, the use of a sophisticated photon typesetter, and the move to a new plant to house the new equipment. Production of the newspaper was to be rationalized. Unfortunately, The Record encountered many difficulties in this transition to more modern production processes, involving substantial nonrecurring expenses; and this move put the newspaper even more heavily into the "red". A major problem was the late delivery of the photon typesetter, forcing The Record to make costly adjustments to 211 its typesetting equipment so that the new press would be compatible with this type. In August 1968, the financial staff in Toronto got their way. When The Telegram itself began to lose money (The Telegram eventually closed its doors on September, 18, 1971), Bassett decided to get rid of The Record, which had experienced losses over a number of years. Again, it should also be noted that Bassett had further lost interest in the Eastern Town- ships after his son had spent an unsuccessful year at Bishop's University in Lennoxville. The sale of The Record in 1968 to Ivan Saunders, the president of the paper at that time, and R. Stafford, a local C.A., represented a return to local ownership and an owner/ manager era. Bassett, consistent with the loyalty he had exhibited to other employees of The Record, gave his former employee first opportunity to purchase the newspaper. The purchase price negotiated was very close to the cost of the physical assets. After acquiring the paper in August, 1968, the new owners waited three months before making their first critical decision. In October, Saunders and Stafford, because of rising costs and falling revenue, were forced to reduce the number of days the paper was published from six to five days. Citing the rising costs of materials, two union wage increases, higher rates for newsprint; the newspaper announced this change to its readers at the same time promising an expanded 212

Friday edition. A second major change made by the new owners concerned mail subscription rates. Induced by the very large increase in postal rates implemented by the Trudeau government, The Record increased the cost of a mail subscription from $12 to $18 in mid-January, 1969. This fifty percent increase was less than the four hundred percent increase in postal costs which The Record faced, but was a substantial price increase for customers. The Record now changed from a newspaper which was primarily delivered by mail to one which was primarily distributed through home delivery and customer pickup. It is estimated that, as a percentage of total distribution, mail subscriptions dropped substantially from about the fifty seven percent level they had been at prior to the increase. Of course, the newspaper had been slowly moving in this direction with its continued strategy of expanded home delivery service; but what transpired in 1969 was something very different. Most of the customers lost, because of higher postal rates, could not be picked up by expanding alternative delivery methods. They lived in areas were such a system was either economically not profitable, or was just not feasible. The Record had little choice; mail subscriptions could not be offered at a price lower than $18, and the customers lost because of this increase could not be offered alternate distribution. A final important change, put into effect by Saunders and Stafford, was in the production area. The capital equipment 21 3 decisions taken in 1967 to purchase a new press and other equipment were reversed. In March, 1969, The Record (with the help of the Goss people) sold its new press to Montreal interests. The reason for this sale appears to stem from the realization of Saunders and Stafford that they did flot have the resources to carry on with The Record as it then existed. Sale of the press reduced the total capital the new owners had tied up in the firm, and as well, reduced the amount of investment that would be required for any potential buyer of the newspaper. At this time, Saunders and Stafford were aware of the interest of Black and his associates in The Sherbrooke Record. In retrospect, this brief period of local ownership might have worked out more favourably, if the environment of that period had been more receptive. The Sherbrooke retail market in 1968-1969 was very bad with many of the downtown merchants in limbo, pending the decision to build a large mail in the region. National advertising dollars were being reallocated to French-language media; and The Record's local owners had no real strong clout, or connections, to protect themselves in the board rooms of Montreal and Toronto. Kieran's postal rate increase had devastating effects on The Record: effects which really sealed the fate of the new owners. The Record's owners of the era did not have the resources to wait out the turbulence of the 1968-1969 period. Another point should also be made. The folksy pater- 214 nalistic way The Record operated for many years, prior to 1968, meant that a great deal of organizational slack existed in the organization. In a situation of tough financial constraints, the level of organizational slack, by necessity, had to be reduced. The new owners, Saunders and Stafford, being local men active in the English-speaking community of Sherbrooke, had great difficulty in making decisions regarding staff reductions, and other resource cutbacks. They knew the personal backgrounds of their staff; and if they were to reduce the quality of the product offered, such a reduction would be plainly visible to their friend, relatives, and neighbours. Saunders's own words describe the effects of Bassett's influence on him, the difficulties he and Stafford faced in adjusting The Record's affairs, and how their approach differed from Black's: Bassett's theory was that if you have people with an organization for a number of years you have to keep these people... keep them until death. Younger people like Black had no mercy for these people- -they just came in and wiped them out... J , D , the part-time truck driver since 1937 P , and they chopped others. At one time, I had 12 "vets" who came back from the war...they were not ail that productive, but we carried them. One lives in X , and is a bit of a mental case. We carried him, they let him go the next day. It is not that we were after brownie points, but it was just the decent thing to do. That's not the way business is done today.5

5 Ibid. 2 15

The 1951 to 1969 period has been called, "Seeds of Change" because many of the actions taken during this period would result in more substantial changes being made after 1969. In that year these seeds would lead to the breakup of the gestalt strategy which had prevailed at The Record from at least the start of the period of study for this research in 1946--a strategy of comprehensive news coverage. Clearly, what gradually changed during this period was the perception that The Record could maintain a sufficient newspaper revenue base to support the quality of product offered to the readership. As long as the newspaper continued with the type of news coverage readers expected, the circulation could be maintained. If quality dropped (and there was evidence that the market could not support the caliber of paper it was receiving), circulation would decline. The Record found itself in a vi- cious circle. While the 1951 to 1969 period did bring changes to The Sherbrooke Record--commercial printing, modernization, new owners--in many ways this period set the stage for the more dramatic changes which were to follow in almost ail areas of The Record's operations in 1969 and 1970. 7.3.3 1969-1973 A New Approach In June of 1969, The Record was again sold, this time to a group headed by Conrad Black. Ail of the members of this group were under thirty at the time, in fact Black was only twenty-four. Black, a graduate of Carleton and Laval universities was the son of George Black, a wealthy Canadian 216 industrialist. Mis partners were ail well educated; Peter White, a lawyer, had graduated from the faculties of law of both McGill and Laval; David Radier, a McGill B. Comm., and a Queen's MBA graduate (1967), had been working as a management consultant. Eventually the Black group ended up buying twenty-one small newspapers in Canada under the banner of the Sterling group. The Record was the first daily added to this group (they had previously purchased two weekly papers - the Eastern Township Advertiser in Knowlton, and the L'Avenir de Brome-Missisquoi in Farnham), and The Record in many ways represented an experiment for these individuals. The purchase of The Sherbrooke Record by Conrad Black and his associates, White and Radier, again marks the beginning of a period of change for The Sherbrooke Record. This period of change was of such an importance for the nature of this organization that it must be viewed as a distinct pattern. Clearly, from June, 1969 until mid-1972, or early 1973, The Sherbrooke Record was completely transformed; a new approach to running the newspaper was put into effect. As a starting point in explaining this transformation, it is useful to look at the new ownership situation. Partial owner/manager administration is the best way to describe the first two, or three years, of the Black Group's ownership. Coming to Sherbrooke for temporary periods, the new owners took turns at the task of implementing the type of administ- 2 17 rative system they wished to see at The Record; and in implementing decisions to change the newspaper into the type of newspaper they wanted The Sherbrooke Record to become. Tight financial control, lean budgets, lower cost labour, and the dominance of the advertising revenue function over editorial and news, were the cornerstones of the system they in- ' stalled. Profitability was the goal they sought to attain. And, while the paper remained relatively small, the "folksy" operating atmosphere, which had been so comfortable for the paper's employees, was eliminated. Black, White and Radler, did not exhibit the same emotional attachment to The Record that either Bassett, or Saunders and Stafford had exhibited during their respective periods of ownership. Bassett had had strong family, and historical ties with the Townships area; and Saunders and Stafford, being local residents, had been very concerned about the continued existence of the newspaper as an institution important to the English-speaking population of the region. "We will make money out of Sherbrooke, but will never live there", accurately portrays the view of the Black group to the Townships region. While certainly interested in the politics of the area (White ran as a U.N. candidate), very few decisions were taken by the Black Group to actively promote the development of the English-speaking community in the Townships--their interests were too widespread across Canada, to be overly involved with the Sherbrooke area. 218

Given this new perspective based on the primacy of adequate profits, a number of important decisions were made involving key decision streams of the paper. Without a press, The Record now existed only as a newspaper, and thus no longer had a printing sideline to support its newspaper activities. The result was the imposition of cost-oriented constraints on the editorial and news side reducing the resources, and attention, these activities received. In essence, the quality of the product was lowered. Many indicators give evidence to this strategy. Young- er, less experienced, editors were hired: editors, who, being overworked and underpaid left the paper once they had gained sufficient experience to make themselves more mobile. Turn- over figures clearly indicate this phenomenon. Fewer staff reporters were allowed, thus reducing the coverage of local stories that appeared in the paper. Increasingly, packaged editorials from The Winnipeg Free Press, The Calgary Herald, and Canadian Press were used. The sports page became very inconsistent with rather poor coverage of local events, and spotty coverage of major national and international sporting events. It appears that attention was paid to local editorials, and sports for that matter, only when the staff had time--and, they seldom had time. The average daily size the reader received remained very small, around twelve to thirteen pages on the average for five days publication. Profits, not editorial quality, ruled the day: 2 19

They Launders and Staffore maintained the excellence of the paper...wasn't two months from the time the last group came in, and they let things slip. Everything went ail to hell. Strangely enough they didn't cut so much percentage wise. Where they cut was dollar wise...if they could eliminate one well trained writer and get two students on a part time basis; that's ail they cared about.7 The consequence of this reduction in the quality of product offered was, of course, a decline in demand. Circu- lation dropped from 8,633 in 1969, to 8,063 in 1970, to 7,240 in 1971. This trend continued until 1974 when it bottomed out. Yet, there was no evidence of any program of decisions geared to stopping this decline. Home delivery had already been expanded to its practical limit, so there was little that could be done to find new customers, aside from promoting the paper--a move that made little sense, it appears, because of the reduction in product quality. One might speculate by advancing the conclusion that the Black Group had made the decision, that a newspaper with reduced quality, and a higher advertising content, at a 6,000 to 7,000 circulation level, was to be preferred to a better quality newspaper with less advertising content having a circulation of 9,000. Profit- ability was the critical factor in this trade-off. Advertising revenue strategy also changed. The Record became more aggressive in trying to increase advertising

7Interview with former Sherbrooke Record Employee A. 220 revenue, and may have benefited from the contacts the new owners (Black in particular) had in Toronto and Montreal. Advertising as a percentage of total space increased; internai disputes in the organization were settled on the basis of the effects on advertising revenue. In terms of production, the strategy of contracting out the printing of the paper was continued. This strategy I started during the last months of the Saunders/Stafford era, allowed the owners to maintain a smaller investment in the newspaper, but was also highly vulnerable. The only major change made by the Black Group was to move the printing of the paper from Granby across the border to the United States. Importantly, this reduced the trucking distance from sixty miles to thirty five miles. One major difference in the operation of The Sherbrooke Record is perhaps obvious, but must be stated--the Record became a newspaper without a press. It was now a different, smaller type of organization: an organization without a production function. The investment of Conrad Black and associates, both in terms of time and capital, was kept to a minimum while the success of this new approach was still uncertain. Within a few months of their purchase, the Black Group began to achieve profits with The Record (Radier, one of Black's associates, has been quoted as claiming it took only four months to make The Record profitable). There can be no doubt, however, that this new profitable status was not 221 achieved solely by more efficient administration of the paper, but also by a conscious decision to lower the quality of the finished product. The fact that the paper no longer had any large management salaries also hastened the return to a profitable position. In any event, The Sherbrooke Record was transformed--a new-approach was now being applied to the newspaper.

7.3.4 1973 - 1976 Stability And Refinement The final strategic period, which emerges from the study of the decision streams of The Sherbrooke Record, begins around 1973, and lasts until the end of 1976. These years form a distinct pattern in that they represent years where the new approach to the functioning of The Sherbrooke Record had been implemented, had proven successful, and now was refined and perfected. Throughout this period, then, the basic nature of the newspaper would flot change. The Record continued to be operated on a low-cost basis, employing inexperienced and younger staff. Also, the advertising revenue function continued to be dominant with profitability being the key cri- tenon against which success was to be measured. A number of key decisions establish the pattern of these years. Each of the important decisions made from about mid-1972 (date approximate) until 1976, were aimed at solving one, or more, of the problems which had emerged because of the new approach to The Record implemented in 1970. These 222

decisions did flot change the nature of the strategy developed by the Black Group, but rather attempted to refine and perfect this strategy. One of the problems The Record faced at this time (late 1972) was, of course, the added expense and inconvenience involved in having the paper produced in the United States. To correct this situation a major decision to purchase a new Goss offset press again was taken in late 1972. The press arrived in April of 1973. This move also necessitated another decision; The Record was forced to purchase a building to have sufficient room for its new production activities. With the new press, The Record was now able to generate some outside printing revenue. In adding the production function, a new series of problems were also created. Since the purchase of The Record from Saunders and Stafford, the advertising department clearly had been dominant. Now another function, directly affecting the profit picture, had to be considered. During 1973, a number of conflicts between advertising and production emerged. Usually, these conflicts resulted in a phone call to Black, and a ruling on the issue. No doubt advertising won most of these battles. To settle this problem, Norm Nichol, who had been advertising manager, was appointed Publisher around December of

1973. As mentioned previously, the functioning of the paper did not change drastically, and it is questionable whether the 223 disputes really were reduced very much by this move. Never- theless, this decision does indicate two important points regarding the strategic pattern of that period: 1) Advertising revenue (and thus, profit) continued to be the dominant concern of the organization; and, 2) Conrad Black felt sufficiently satisfied with the way the newspaper was running that he unburdened himself of some of the tedious tasks of being publisher. A second problem which had to be tackled during this time concerned the frequent turnover of editors. Given the amount of resources Black and his associates were willing to allocate to the editorial function, it was clear that inexperienced editors would have to continue to be used; however, the increasing frequency of changes in editors was beginning to become bothersome to Black and his associates. During 1974, a tentative solution was attempted when Alex Radmanovitch resigned as editor. This resignation prompted Black to bring in an older editor from another part of the Sterling Group. This editor, Hugh Tait, was originally from the Maritimes, but had been working for Black at a small western Canadian newspaper. It is unclear exactly how much Tait was paid; although it is safe to say his salary, while more than an inexperienced editor would receive, was still not large given the responsibilities. In any event, this solution did not work out (Tait had personal difficulties) and in August, 1974, Crosbie Cotton, a former editor returned for a few weeks. Cotton did not wish to continue as editor. In September, 224

1974, the decision was made to advertise for editorial staff in the paper. In November, Barbara Stevenson, a former Record staff reporter, took over as editor; and Len O'Donnell who had been sports editor for twenty-f ive years was appointed associate editor. Stevenson was to provide the brains, O'Donnell was to provide the muscle. It is unlikely that any substantial increase in resources was allocated to the editorial function at this time, although some increase in the allocation did occur. The position of editor became more manageable at this time, with O'Donnell relieving Stevenson of some of the administrative duties of the editorial task. Stevenson remained as editor for two years up to the conclusion of the period of study, December, 1976 when a new editor was named. By 1973, the Sherbrooke retail market had improved con- siderably mainly because of the long .awaited opening of the Carrefour de l'Estrie--a 110 store mall. Other retail estab- lishments also opened around this time. Correspondingly, the advertising revenue market for The Record was much improved with Eaton, Sears, Pascal, Steinberg and Canadian Tire and other retailers doing more advertising in both French and English. These increased sources of revenue, no doubt, provided The Record with more freedom to solve some of the problems inherit in the operation of the paper. One problem did escape solution. The Sherbrooke Record had lost, to a considerable degree, the confidence of the 225

English-speaking population. Because of the general lower- ing of quality and the lack of reporting (or inaccurate reporting) of local events and organizations, The Record's credibility was quite low. This problem continued throughout the 1973 to 1976 period, showing no real signs of improvement. The only response that was forthcoming from The Record was a defence of its own activities as outlined in Ap- pendix D of this paper. Again it is evident that only a substantially increased allocation of resources to the editorial side could help The Record regain some of its lost prestige; and the Black Group seemingly was unwilling to allocate these resources given their profit objectives; The attitude on the advertising side was that editorial was just something you had to have. My impression was that advertising gets what advertising wants and editorial just had to learn to live with it... There was one thing they did. In the old Record building at Roy Street we used to have a fair size editorial department...One day with no previous announcement, some guy came in and said we are going to take one half of the editorial department 2ipace7 --to store newsprint.8 In summary, The Record did flot change its operations to any great degree during the 1973 to 1976 period. Yet, the growing revenue and profits of the paper, reported to be

8 Interview with a former Sherbrooke Record editorial employee, Employee C, Lennoxville, Quebec, August 1981. 226

$100,000 per year, did allow Black and associates to address some of the difficulties and problems that existed at The Record. This period is best interpreted as a pattern which shows decisions geared to the refinement of an approach which had proved itself to be workable, and effective, in accomp- lishing the owner's objectives--profitability. In December, 1976 The Sherbrooke Record was sold to George McLaren, a Sherbrooke lawyer. 7.4 Constraints On Strategic Adaptation Two major periods of strategic change can be found in the decision streams of The Sherbrooke Record: the change to the 1951-1969 strategic pattern; and the change in almost ahl of The Record's decision streams in 1969. The Record's third strategic change, in 1973, seems of lessor importance, basically involving the addition of a production function partially to complement other activities of the owners of the paper. Figures 14 and 15 portray these strategic shifts for The Sherbrooke Record, and the environmental forces which contributed to the need for a strategic realignment. 7.4.1 Strategic Change - 1951 It is evident that two major environmental forces had impact on The Sherbrooke Record during the late 1940's and 1950's. One of these was the very slow growth rate of the anglophone market in which the paper operated; the other was the change in the nature and structure of national advertising activities in Canada. Both of these environmental forces FIGURE 1 4 • 1 Slow Growth o f Anglophone Popu lat ion Changes in the Stru c ture o f National Advertis ing Comp e t it ion From Ele ctron ic Me dia

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la Bargain ing/Persuas ion Q) cd Incremental Del iberate 227 228 were not crisis type stimuli but were rather problem stimuli which did give the organization time to work out a strategic response. Earlier, this thesis noted that the English-speaking population of the Eastern Townships grew very slowly in absolute numbers during the 1941 to 1961 period, and that it began ta concentrate in English-speaking pockets throughout the Townships. These factors are revealed in the circulation figures of The Sherbrooke Record, and in the Census figures of 1951 and 1961. The Record's circulation peaked in 1951, and the anglophone population of the immediate Sherbrooke area had, for ail intents and purposes, levelled off in absolute numbers by 1961. Interestingly, the circulation of The Record was not that different from the French-language newspaper, La Tribune, until the mid-fifties when the circulation of La Tribune began to grow (for example, in 1946 the circulation of La Tribune was 13,459, while that of The Record was about 9,000). Little possibility existed for growth of The Record as an organization if its only product was the sale of English- language newspaper advertising. While the population changes creating this situation were gradual, it is evident that the trend was clear for the managers and owners of The Record. Clear signais existed in the newspaper's circulation figures, cancellation of subscription numbers, carrier routes and growth figures for new advertisers. The attraction of man- 2 29 ufacturing jobs in growth areas such as Ontario and Montreal was evident; even John Bassett, owner of the paper left for the greener pastures of Toronto in 1948. Growth potential in the English-speaking newspaper market of the Eastern Town- ships seemed limited, and the consequences of this limited population growth for The Record were known. A second environmental problem for The Record was more immediate. The structure of national advertising was beginning to change especially with respect to grocery and other retail types of enterprises. Growth in the size of these retailers in the late 1940's and more particularly the 1950's, meant that more and more, these organizations were getting involved in advertising. As these larger chains assumed more market power, they pressured manufactures for advertising support, and newspapers for lower, local, advertising rates. In the early 1950's, these demands were beginning to hurt The Record's advertising revenues. Coupled with this was the growing amount of funds that were being allocated to electronic media. Radio was at its peak in the late 1940's and early 1950's, and television was beginning to emerge in Canada. Again this type of environmental change was gradual for The Sherbrooke Record, but unlike population changes, could have very abrupt effects on the newspaper if a major advertising account left the paper, or reduced its expenditures. While the exact outcome of the changing trends in advertising 230 were not completely known, the general direction of the consequences for The Record manifested themselves very clearly-- less national advertising revenue for the newspaper and relatively lower total revenues. The strategic response of The Sherbrooke Record was one which is well known in the strategy literature: the low growth potential of The Record's existing market, coupled with severe barriers on geographic expansion, led to a search for new products--in this case, a form of concentric diversification. The Sherbrooke Record moved into commercial printing as a possible source of future growth in revenues. The process by which The Record adopted this new strategy was incremental and vague. Few clear decision points took place;instead opportunities in the environment were pur- sued when they arose. The probable cause for this state of affairs was the absence of the owner of the newspaper who was not particularly inclined towards commercial printing. Local management in Sherbrooke had to sell the change in strategy; thus, a process of negotiation had to be undertaken. Exper- imentation, testing, and tentative decisions characterized the way the organization moved into commercial printing. Without the commitment of the owner, there was little else that could be done. The above description obviously indicates that The Record was not completely constrained by external factors-- the exieing newspaper market was not attractive, but other 2 31 avenues of potential growth were available. The major constraint on strategic adaptation came from within the organization in the form of the personal preferences of the owner. In addition, it seems that the owner had other projects (The Toronto Telegram) involving a substantially larger investment to take up his time. After 1951, other factors contributed to the lack of enthusiasm for major changes at The Sherbrooke Record. From that year The Record became part of a larger organizational group where corporate level strategies were equally important. The fact that, from Bassett's prospective, the movement into other organizations also represented an expansion into new strategic domains away from a domain of limited growth, should flot be missed--it is just that such a strategy is at a different level of analysis. Ta summarize.then, the major constraints on the strategic adaptation of The Sherbrooke Record between 1951 and 1968 were; INTERNAL CONSTRAINTS EXTERNAL CONSTRAINTS - preferences, and - absence of alter- values of the owner native products/ (strong) markets (weak) - preoccupation of dominant coalitions with other organizations, absentee contrai (strong) 7.4.2 Strategic Change - 1969 Perhaps the most important characteristic of the environmental forces which affected The Sherbrooke Record during

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cf) PLI Qua 233 the 1960's was that these forces were not new; rather they represented a continuation of the same, but intensified, environmental problems of the 1950 9 s. Certainly, the social changes which took place in Quebec during the 1960's added ta the impact of these environmental trends. With respect ta the relative decline of the English- speaking population of the Eastern Townships, it was evident by 1965 that the market was a minority market with little growth potential. While The Record had been competitive with La Tribune prior to the mid-1950's, by 1965 the French-language newspaper had grown to a circulation of over 40,000. The minority market had materialized and increasingly the generation of advertising revenue became difficult. The structure of advertising had also continued ta change. Electronic media, especially television, grew during the 1955 to 1970 period, placing great pressures on newspapers. National advertising became more sophisticated with decisions being made in Torontc and Montreal agencies on the basis of readership, or audience ) when advertising dollars were allocated. For newspapers other problems, such as rising costs and large capital investment requirements, greatly squeezed profit margins. In larger centers in both Canada and the United States newspapers began to close; and cities with only one daily newspaper became common. Changes in The Sherbrooke Record's environment were still graduai during the 1960's although the rate of change 2314- had accelerated. The consequences of the trend of being in a minority market, and of the new economics of newspaper publishing j began to clarify. Ironically, The Record's initial response to its increased environmental problems in 1967 and 1968--to do more of the same and purchase a new offset press--actually moved the stimuli in the environment from problem to crisis proportions. The newspaper had been losing money from about 1964, and problems in changing to the new press substantially increased The Record's net loss. The timing of the increased commitment to commercial printing strategy was wrong: The Record had missed a potentially significant environmental opportunity. The values of the owner, and The Record's own reputation as a solid newspaper, net only blocked the adaptation of the organization with respect to domain selection, these factors also constrained the way The Record adapted within the newspaper market. Necessary cutbacks and reductions in the quality of the paper te a level the revenue base could support were never made. A change in ownership in 1968-1969 te local owners also failed to bring about these necessary changes; the new owners were toc committed t.o the employees and the paper's reputation for a particular quality of product. When strategic change did corne it was implemented by outsiders and was of a very major nature. The proactive management introduced by the Black Group had no emotional ties 235 with the past, nor with the present employees. Strategic change in 1969 was abrupt, harsh, and comprehensive. The newspaper was completely transformed with the major effect being lowered operating costs, and lowered quality. This period of strategic change at The Sherbrooke Record again shows the importance of internai constraints in limiting strategic adaptation. By 1969, the environment of The Record had deteriorated to the extent of threatening the organization's survival. Failure of the organization to act earlier had reduced The Record's opportunities to expand its product domain, and had made internai adjustments more pain- fui when they eventually were made. The constraints during this period can be summarized as follows; INTERNAL CONSTRAINTS EXTERNAL CONSTRAINTS - values of the owners - competition in (strong) concentric domains (moderate) - past decisions and strategies (strong) 7.4.3 Strategic Change - 1973 The 1973 strategic change of The Sherbrooke Record dif- fers from the two previously discussed periods because it was of less importance, and because it was brought about more by a change in the aspirations of owners of The Record than by a change in The Record's environment. As such it is more appropriately analyzed at the level of analysis of the larger organizational interests then the owners of The Record had acquired by 1973. 236

Neverthèless, The Record did change its strategic pattern with the introduction of a production facility to print The Record, and a number of other captive newspapers which had been acquired. What is clear is that by 1973 the Sherbrooke economy had become more prosperous, and the Black Group had verified their approach to running The Record. It also appears that some of the uncertainty about the exact consequences of attempting to run a newspaper in the minority English market in Sherbrooke had been removed. For the owners of The Record in 1973, the purchase of a new press represented a renewed commitment, and increased investment, in the newspaper. Additionally, it represented an attempt to increase the stability of the organization's revenue sources because efforts were also made to get outside printing contracts. Interestingly, this solution to the organization's revenue generation problems was the one which The Sherbrooke Record had been attempting since 1951. In fact, three different commercial printing operations were created by The Record itself, or personnel connected with the paper, during the 1946 to 1976 period. Constraints on strategic adaptation during the 1973 to 1976 period arose from two sources: INTERNAL CONSTRAINTS EXTERNAL CONSTRAINTS - growing preoccupat- - competition from other ion of owners with organizations in con- other organizations centric domains (moderate) (weak) 237

7.5 Summary Chapter VII has presented a description and an analysis of the strategies of The Sherbrooke Record. Four strategic periods were identified for The Sherbrooke Record: pre-1951, stability; 1951 to 1969 partial change; 1969 to 1973, global change; and 1973 to 1976 moderate expansion. A number of significant environmental changes affected the newspaper during the 1946 to 1976 years including: the growth of electronic media, a restructuring of national advertising activities, the decline of the anglophone advertising market in the Eastern Townships, and a growing profit squeeze in newspaper publishing. The inattention of The Record's owner, and his values and concept of what a newspaper should be, were two of the major constraints on the strategic adaptation of The Sherbrooke Record prior to 1969. Another was the absence of potential alternative products and markets. CHAPTER VIII

CKTS RADIO

8.0 Background The origins of CKTS Radio can be traced to 1937 when radio station CHLT began broadcasting in Sherbrooke. CHLT was a bilingual station broadcasting about fifty percent of the time equally in English and in French. The station was owned by Senator Jacob Nicol who also was the principal shareholder of La Tribune, Sherbrooke's French language newspaper. In 1946, CKTS was opened as an English-language station representing the first time in Canada that two separate stations, with different frequencies, were operated from the same mast. The initial license of the station was granted to The Telegram Printing and Publishing Company, with Senator Charles Howard as the President. In fact, the station was managed by La Tribune and for the next twenty years was very much considered, along with CHLT and C1LT-TV, as part of a communication organization centered around La Tribune. In 1957, when Senator Paul Desruisseaux and Mr. Alphee Gauthier assumed control of La Tribune from Senator Nicol, CHLT Radio and CKTS Radio (through The Telegram Printing and Publishing Company) were included as part of the saine change in ownership. 239

Later, in 1967 Power Corporation acquired La Tribune, CHLT Radio and CHLT-TV, and CKTS Radio. In 1970, when Power Corporation decided to reduce its activity in communications (apparently because of some difficulties with the C.R.T.C.-- Canadian Radio and Television Commission), Phillipe de Gaspé Beaubien assumed control of almost ail of Power Corporation's communications interests in Quebec including seven A.M. radio stations, three F.M. stations, two television stations. CKTS, CHLT Radio and CHLT-TV, thus, became part of a new communications organization later incorporated as Télémedia Quebec Ltd. when this purchase was approved by the C.R.T.C. on June,17, 1970. In December, 1971 the C.R.T.C. granted approval for The Telegram Printing and Publishing Company to change its naine to CKTS Radio Sherbrooke Limited. 8.1 Summary Of Strategic Decisions The major decision streams of CKTS Radio cari be grouped into a number of categories: markets served and broadcast signal, programming, revenue strategies, capital investments, administration, and external relations. These strategies are presented in summary form in Figure 16. Complete details on the decision streams which were used to develop these summaries are given in Appendix E. 8.2 Identification Of Strategic Periods Figure 16 reveals three strategic periods in the important decision streams of CKTS Radio: 1945 to about 1966; 1966 to 1975; and a final pattern beginning in 1975, lasting FIGURE 16 SUMMARY OF STRATEGIC DECISIONS CKTS RADIO, 1946-1976

Product Strategies Weekly Newspaper Radio Station

Broadcast Area 1 Expanded Power 1,000 Watts 1 10,000 Watts 250 Watts

C.B.C. Affiliation Reduction

Music Emphasis Heav-y Increasing Il Decreasing

News Rela-ted Programmes Increased News Commentary I Dependence on C.B.C. for Major Newscasts

Communitv and Public Affairs Programmes Decreased Many 1

Religious Programmes Few Many

Variety and Sports Programmes

So:ne Re duce

Advertisine Rates Increase -1 Stable

Prime Time Hours

Reduced Many ril Reduced II Sales Strategies Sole on Its Sold as Part of CHIT Group Value

Sales Personnel CKTS Sales Force

Facilities Separate Shared

Capital Investments Incremental Investments CKTS Made From Perspective of CHIC Group 1 Number of Empioyees IlTwelve l Six Nine

Management Independent CHLT Manager

Dependence on CHIT Group

APProach to Regulatcrv Agency Agzressive Passive I 11,1 1 ,111 1 ,11_11 1 ,11, 1 11,1 1 ,11ip 195C 1r60 1970 241 at least to the end of the period studied. It is evident that few major changes in CKTS's strategies took place in the first twenty years that CKTS was existence as an independent station. From 1946 to the end of 1965, The Telegram Printing and Publishing Company, the anglophone side of the Tribune-CHLT group, operated a weekly newspaper in addition to the station. While some expansion occurred with respect to the CKTS broadcast area during this time, expansion of the power and range of CKTS's signal ended in 1967. In any case, these actions were taken as part of the development of the entire CHLT group, as were ail of the capital investments of CKTS during this period. All of the Sherbrooke stations CHLT, CHLT-TV, CHLT-FM, and CKTS were operated within the framework of one organization. The summary of CKTS's strategies also reveals a variety of programming during the 1946 to 1966 with increasing emphasis on music. The station's advertising rates were increased during this period, eventually levelling off between 1963 and 1968. Although it is difficult to establish an exact starting point, it is evident that a second strategic pattern emerged between 1966 and 1968. A case can be made for designating 1966 as the start of this period because of the importance to the station of certain strategic decisions made in that year. A salesforce was established for CKTS in 1966-1967; the sta-- tion was placed directly under the CHIT manager in a sort of joint management arrangement; and the weekly Sherbrooke 242

Telegram was closed at the end of 1965. Other decision patterns which emerged during this period involved a trend towards reducing the C.B.C. component of the station's broadcasts (even disaffiliation, if it could be obtained), and the movement to a mixed musical format with a leaning towards country and western music. From the late 1960's onwards, the strategy of having an anglophone figurehead for the station decreased in importance. More significantly, at about the same time, the capital investment decisions of the station were made using CKTS as the framework for evaluation mot the entire CHLT group. The final strategic period that cari be inferred from CKTS's decision streams is more obvious. In 1975, CKTS changed its target market from the anglophone market to the francophone youth market in the eighteen to thirty four age category. To do this, the station shifted its music format to comtemporary music with a rock-and-roll emphasis, greatly decreasing religious and public affairs programming in the process. This also meant that new personnel were introduced to the station--itself a change in strategy, and that the station took a new, more agressive, approach in its relations with the C.R.T.C. This strategic pattern continued to the end of the 1976 period. 8.3 Description Of Strategic Periods 8.3.1 1946 to 1966, Stability/A Neglected Orphan In 1946, CKTS was created when the previously bilingual 243 station CHLT was split into two stations--CHLT continued as a French-language station, CKTS operated as an English-language station. In many ways, the manner in which CKTS was created greatly influenced the way the station developed over the next twenty years. Starting from the time of its creation, CKTS was dependent upon the CHLT group for management, and on the C.B.C. for an important portion of its programming content. The result of this early dependence, and the absence of any decisions to change this state of affairs, was that CKTS did not develop its own managerial and organizational identies; it muddled along as a rather insignificant part of the CHLT group until the mid-sixties. The control exercised over CKTS by CHLT management affected many of the CKTS's key decision areas. While the program manager essentially acted as a type of station manager from about 1955 to 1960, and later the Editor of The Telegram doubled as station manager of CKTS between 1960 and 1965, it is evident that CHLT management made ail of the important decisions affecting the station throughout the entire 1946 to 1966 period. The station's technical side was completely integrated with CHLT with the same technicians being used by both stations. It appears that after quality transmission equipment was purchased little else was done to develop CKTS: It was so cosy. They had the base of La Tribune. Whoever designed that Lihe studio layout7 did an extremely good job...it was a compact operation. They 244

had the best R.C.A. heavy duty, maintenance equipment. Everything was first class! They put the plant in operation, and really didn't have to do much after that-it worked.1 The area where this lack of individual identity most affected the station was in capital investments. It appears that major investment decisions were made on the basis of the needs of the entire CHLT group with little consideration for the needs of CKTS. The acquisition of the La Tribune interests, including the radio stations in the mid-1950's, by the Desruisseaux/Gauthier group did bring an era of more proactive management, but this proactivity was geared more to other parts of the Tribune organization than CKTS. Some efforts were made to expand CKTS's signal and broadcast area, these actions were strongly influenced by the fact that a new tower had to be built for CHLT-FM. Of extreme significance during this period was the fact that after 1955 the owners of La Tribune were preoccupied with the creation of CHLT-TV, and had neither the time or the financial resources necessary to develop CKTS. A station manager who at various times had responsibility for CHLT and CKTS radio stations described this situation as follows: LUKTS7 was a neglected area; we put a lot of money into other things; it eKTS7 felt like an orphan...CHIT-TV would by machines costing thousands

1Interview with a former CKTS-CHLT technician, Employee A, Lennoxville, Quebec, September 1981. 245

• of dollars and ZUKTp7had trouble getting a tape recorder --this posed problems.2 This lack of a clear identity for CKTS also exhibited itself in other areas. Advertising on the station was most often sold as part of a package with other stations in the CHLT group. Clearly, the lack of a salesforce devoted exclusively to CKTS sales meant that the station received little attention with its spots thrown in as a bonus if spots on CHLT, or later CHIT-TV, were purchased. Even the success of a brief experiment in 1958-59, when a salesman for CKTS was hired, failed to bring about a change in this decision pattern: It started out being sold as a package. CETS had a good reputation so it was not a difficult selling job. The English-speaking market was, of course, bigger at that time, so it was not difficult. We had a lot of smaller accounts at that time so it definitely made a big difference to have just one salesperson. We were generating quite a fair dollar revenue perhaps $8,000 or $9,000 a month locally. The small market was not a handicap at that time 21958-19527: that became in evidence later.3 The programming offered by CKTS was very much influenced by C.B.C. policy during the 1946 to 1966 period. As part of the Dominion Network the station depended on the C.B.C. for

2Interview with a former CHLT-CKTS station manager, Henri Delorme, North Hatley, Quebec, October 1981.

3Interview tith a former CKTS salesman, Employee B, Sherbrooke, Quebec, November 1981. 246 major news broadcasts, evening programming and special events. Supplementing the network coverage were transcribed programmes purchased from a transcription service on a packaged basis. From 1946 to the end of 1960, CKTS offered a variety of programmes including draina and quiz shows. Increasingly throughout the 1950's shows with a music format grew in importance, particularly with respect to the statiorfs locally prepared programmes. In 1961, about 61 percent of the station's programming was devoted to music (of many variet- ies) with public affairs and religious broadcasts also being important. Generally speaking the station was satisfied with the C.B.C. arrangements during the 1946 to 1966 period. Regu- lations of broadcasting was not stringent during this time and aside from getting approval for pattern and power changes and the fact that certain programmes had to be carried, the station could operate in a rather independent fashion. Never- theless, affiliation with the C.B.C. was a necessary condition of the CKTS's broadcast license. The changes in radio listening habits of the 1950's, which arose because of the growth of television, did not result in major changes in the way CKTS operated. The words of an employee of CKTS at that time offers one reason why this was the case: The bottom une to my way of thinking 247

Las that7 they had had things their own way for so long--no T.V., monopoly on radio; they were making money on the French station and were using the other as a tax write-off. The bottom une ZWas that7 they never looked to the future; they never foresaw competition, never prepared for competition, never sent their men off on courses, or this sort of thing until it was too late. They never prepared for the 1960's. It was really management's fault; they must have seen the thing coming ...there was just no planning.4 The station's Bureau of Broadcast Measurement audience survey reveals that any significant growth in audience during the 1946 to 1966 period was basically the result of power changes which would allow the station to go into a new area. The station had primarily an English-speaking audience during this period. Of perhaps more importance was the fact that the station never really caught on with the anglophone population of the Eastern Townships. It must be remembered that many homes in the area were able to pick up Montreal stations such as CJAD, and by 1957 both CHIT-TV in Sherbrooke, or certain American television stations were accessible: The English community didn't like the station on the whole as far as I am concerned. It was sort of that the rock and roll kids liked it. If ever you put on symphony hall, and we had to do a certain amount of this with the Dominion Network, they took a dim view of this. We had some letters and a few friends.5

4Interview with a former CKTS manager, Employee C, Lennoxville, Quebec, September 1981.

5 Ibid. 248

The results of CKTS decisions were of very mixed success during the 1946 to 1966 period. It should be noted that it is very difficult to interpret CKTS's profit and loss figures because of a number of factors. One was that the decision to show a profit for the station during the 1946 to 1966 period was more a function of the tax situation of the owner's than a true indication of CKTS's performance. The existence of many joint costs which had to be allocated between CKTS, and other stations in the CHLT group, certainly made it easy to estimate profit on the most favourable tax basis. Never- theless, it is clear that the station never really had a strong cash flow: I can say to you when Senator Nicol had it one year, it would make a few hundred, or maybe $1,000 to $1,500 in the hole. He kept it anyway...The station was fairly good; a lot of it came through the English set-up of the C.B.C. The station never made any money while I was there. It was always in a deficit. If we made money, it was a few hundred dollars in a year's time; Lihie did not justify what we had in it.6 5.3.2 1966-1975 Change/Concern Over Profitability The second strategic period of CKTS Radio begins about 1966 when a number of decisions were made which indicate that a new approach to CKTS was taken. This new approach involved more concern over the prof itability of the station which

6 Interview with the late Senator Paul Desruisseaux, major stockholder of CKTS Radio, Sherbrooke, Quebec, October 1981. 249 itself led to increased attention being given to the station within the CHLT group. As a background to this decision l it should be noted that by 1967 Senator Paul Desruisseaux had assumed clear majority control of the La Tribune/CHLT organization by purchasing the interests of the Gauthier family. In December, 1965 the first move in the direction of increased profitability for The Telegram Publishing Company was made when The Sherbrooke Telegram was closed. The weekly paper was never very profitable and during the 1960's had been reduced to a sort of entertainment guide giving television and radio listening. Interviews with Senator Desruisseaux reveal that the reason he and the Gauthiers kept this paper) and to a certain extent CKTS ) going between 1955 and 1965 was to respect the wishes of Senator Nicol, the previous owner, who had expressed his wish to have both organizations continue to serve the anglophone ppulation of the Eastern Townships. The fact that the obviously unprofitable Sherbrooke Telegram was keptin operation until 1965 seems to support this claim. The closing of The Telegram also corresponded with the departure of its editor who also served as station manager for CKTS. The station thus returned to the direct control of the Cl-LIT station manager who also took on the responsibilities of CKTS as well. Again this can be interpreted as a signal that increased emphasis was to be placed on the performance of CKTS. •While important decisions concerning CKTS were always made by managers'of the CHLT group in the 1960's, this 25 0 control was even more direct and more detailed between 1965 and 1972. A second decision showed an even more important change in CKTS's method of operations. Between 1966 and 1967 CKTS developed its own sales force as did ail of the stations in the CHLT group. This action was very significant for CKTS because, with the exception of the 1958-1959 experiment with a salesperson, it marked the first time sales personnel worked specifically on the development of a market for the station's advertising time. Other changes between 1966 were also made in the station's advertising rates. The five minute and fifteen minute rates were stabilized in 1966 with no increases in price through to the end of the 1976 period; spot announcement rates were also held constant between 1968 and 1976. Both of these moves obviously were aimed at increasing the volume of CKTS advertising by attracting new clients. Similarly, the prime time (Class AAA) period was redefined in 1966 to cover only the 7.00 A.M. to 1.00 P.M. period, effectively making it even less expensive to advertise on the station for a significant portion of the day. This increased concern with the competitive position of CKTS was no doubt heightened by the opening of a new French- language radio station, CJRS, in September, 1967. The words of the manager of the new station, who previously worked for CHLT as well described the impact of this new force in the 251

Sherbrooke market: What happened is that CHLT had been a monopoly, but was too relaxed. It had grown lazy --a fat cat. They had created a lot of ill feeling by forcing people to buy time on radio and television. This created an opening for CJRS --a young more aggressive group... In September, with a lot of P.R., they came on the air; people were anxious to hear them...We did well; they were ar- rogant. We were new with vim and vigor.7 The effect of the introduction of an aggressive competition on the CHLT group, plus a number of other factors,seems to have resulted in increased concern over the profitability of CKTS as well as CHLT. Compounding this was the fact that in 1967, CHLT, CHLT-FM, CKTS and CHLT-TV were moved to the Télé-7 building on King Street West. This building obviously involved a substantial investment which had to be recovered. Added concern for profits came in 1968-1969 when ail of the stations were sold to Power Corporation, and later in 1970 to Télémedia (Power Corporation, following C.R.T.C. pressures disposed of nearly ail of its broadcast interests in Quebec).' Thus, from 1968 onwards CKTS was part of a larger organization in which the prof itability of individual components of the organization were systematically reviewed. This need for increased profitability did effect CKTS in a number of ways. One was in the area of capital investments. After 1968 the station was evaluated for investment

7 Interview with Employee B. 252 purposes not as part of the CHLT group of stations, but rather as an investment center in its own right. This change allowed the station to compete for funds to upgrade the quality of its product providing,of course, promised returns justified the investment. Additionally, at this time, the station's concern over its association with the C.B.C. intensified, because it was felt that the network affiliation was detrimental to CKTS commercial activity. This belief led to a strategy of reducing the network affiliation where possible, even to disaffiliation, although the latter was never realized during the period studied for this research (in 1980, it did take place). Throughout the 1966 to 1975 period CKTS continued to have a heavy C.B.C. influence. After 1962, the station was part of the C.B.C. National network and no longer had the sanie degree of freedom that it had with the Dominion Network--more of the C.B.C.'s serious programming had to be aired. The emphasis on music continued throughout this period; It was middle of the road blending towards country 2Eusi27; there was not a straight format. The format was broken up into country at specific points in the day. For years between 5.00 p.m. and 6.00 p.m. was a country music slot. There was also a fair amount of religious programming at that time;from 7.00 p.m. to 7.30 p.m. jhere was7 Back to the Bible... we had twenty-f ive hours of C.B.C. commitment and gradually we shortened it to twenty hours later.8

8 Interview with a CKTS advertising manager, Employee D, Sherbrooke, Quebec, November 1981. 25 3

Music as a percentage of total air time dropped from 57 percent in 1964 to 50 percent in 1970. At the saine turne, changes in C.B.C. network policy resulted in about 27 percent of air time being devoted to news and news commentary by 1970. Bath religious programming, and community/public affairs/educational programming, each remained at about 9 percent of total air time throughout the 1966 to 1975 period. While CKTS did not make very much money during this second strategic period, it did become more important relative to CHLT and other stations in the Sherbrooke group. The increased competitive market in the area caused by the creation of CJRS, and the introduction of cable television in the late 1960's made the Sherbrooke market difficult for CKTS. Inter- views reveal that CKTS, nevertheless, was useful to its owners: ZUKTS7 didn't make money. But don't forget it protected them, and it gave them ah l kinds of "political favours" with the C.R.T.C....It gives you a little leverage when xou want favours somewhere else. gou/ say that you are supporting the English station. For example, I mean, asking for an FM licence in other areas of the province. Asking for a renewal of licence for any other station--its a big network... We were a buffer. Every dollar that went ta CKTS didn't go ta Radio Mutual and CJRS.9 Substantiating the argument that CKTS was in its own way important to Télémedia was the fact in 1972 the station received

9 Ibid. 254 its own station manager; for the first time CKTS had a manager, independent of the CHLT group, who was charged with developing the station's potential. In terms of its audience the station's total weekly audience gradually increased to about 40,000 after its 1967 change in power. The station's audience was essentially drawn from the English-speaking population during this pre- 1975 period. However, any growth in audience size was in fact due ta francophones occasionally listening ta the station. 8.3.3 1975 - Global Change/Rock Music For A French Audience Major changes were made in the strategies of CKTS in late 1975. At that time, the station completely redefined its market, moving from a target market of the English-speaking population ta a target market of French-speaking listeners in the 12 to 34 age category. Ta do this, CKTS adopted a contemporary rock-and-roll music format. This change must be regarded as global in nature in that it altered the programming, the commercial policy, the audience, and the performance of CKTS. The process by which this change in strategy was impie- mented involved a number of steps. Following a lengthy strike at ail of Télémedia's broadcast stations in Sherbrooke during the June, 1974 to January, 1975 period, the profitability of CKTS deteriorated during 1975. The settlement which had ended the strike was very favourable to labour, and CKTS's new salary 255 scales were very high. Thus, when during the summer of 1975 the English-language radio station in Quebec City closed, Télémedia took advantage of the situation to bring in Dave Atkinson as CKTS station manager. Atkinson had been extremely successful in reorienting the Quebec City station to a rock- and-roll format before the C.R.T.C. had disallowed the station's new format: Lit was7 a graduai transition after January 1975. Things were not good, and I don't mean just in a union sense - we had management problems. Just as a coincidence, CFOM in Quebec City was about to be closed, and they were aware of what Dave Atkinson had done. gheI7 jumped at the change to bring in Dave, and do what he had to do.10 The specific changes that were made were made overnight. Ar- riving with three of his announcers from Quebec City, Atkinson virtually changed the CKTS format overnight. The format adopted in September, 1975 involved a shift to a contemporary rock-oriented programming with emphasis on the "top forty" hit listings, and the playing of "olden gold- ies" (popular rock-and roll records from the past). Music programming increased to a total of 67.4 percent of CKTS's total air time, and both public affairs and religious programming were dropped each from about 9 percent to 2 percent of total broadcast time. Montreal Expo's baseball games were dropped from the schedule (they were also on CHLT Radio), and

1 °Ibid. 256 news broadcasts were deemphasized. Not only was the content of CKTS's broadcasts changed but so also was the presentation of the material: the new format limited disc jockey's time to talk between records to a few seconds. Other commercial policies of the station were also changed. Younger and more aggressive salespersonnel were hired; new clients were approached; and the way spots were aired was changed: He jitkinson7 knew what he was doing about programs and sales also. He was really marketing oriented. For example, when he changed the format not more than ten minutes per hour, nor more than two back ta back Spots were allowed7. That was quite different from what we were doing in Sherbrooke, with CHLT or CJRS. You had as much as six or seven back ta back spots of different retail outlets.11 Other aspects of the change made in 1975 involved the fact that CKTS's format was changed before C.R.T.C. approval was given. The changes were made in September and C.R.T.C. hearings did not take place until September and October with approval being granted in February, 1976. Unlike the Quebec City change, the station's new programming format did go through. It should also be noted that the strategy of reducing the C.B.C.'s impact on CKTS was also continued in 1975 and 1976. C.B.C. network programmes were built into the CKTS schedule in a way which minimized their effects on the new

11 Interview with a CKTS saleman, who worked at the station in the 1970's, Employee E, Lennoxville, Quebec, April 1981. 257 contemporary music format. It appears that Atkinson was given a rather free hand in implementing this new strategy. Funds were definitely invested in the station during the changeover period, particularly to upgrade the station's profile with French-speaking listeners; It was a country station. Nobody knew about it 527 we had ta do a lot of promotion to increase the exposure. We had ta move them. It was hard with a lot of promotion =-like the van he bought. Every- body was mad --the managers in Montreal at Télémedia. They were used ta having a little Gremlin, or something like that. There was no identity.12 Other promotional efforts aside from the CKTS customized "rock" van involved things such as carnivals at the local shopping center, and promotions for prizes. Internally some resistance was felt from older CKTS announcers who could not be let go be,cause of the collective agreement. For the most part, however, it appears that many of the other employees were not upset by the new format; in fact, they were content ta see the station begin ta change ta a more commercially promis ing strategy. A final strategic change which took place during 1975 was the movement in November to CKTS's own rented quarters in downtown Sherbrooke. This move, which was a Télémedia strategy ta have different locations for all its Sherbrooke stations after the disastrous effects of the 1974-75 strike,

1 2Ibid. 258 marked the first time that CKTS operated in separate location from the CHLT group. This step continued the development of CKTS as an independent organization following the establishment of a sales force in 1966-1967, and the appointment of the station's own manager in 1972. The results of CKTS's change to a new format in terms of listening audience were dramatic. CKTS's total weekly audience jumped to over 70,000 listeners by the end of 1976 from previous total of about 40,000 to 45,000 listeners. Al- most ail of this increase came from the attraction of French- speaking listeners while the English-speaking audience declined slightly. On the commercial side, the success of the station was more moderate. Advertising revenues increased to an estimated $200,000 in 1976, but it appears that the station did have some difficulty in converting its new audience size into advertising revenue. One of the difficulties was that while a knowledge of English seemed not to be a requirement to enjoy rock-and-roll music; it was a requirement to understand advertising messages: the station's acid test for the effectiveness of spot announcements was whether a francophone employee on staff, who possessed a limited knowledge of English, could understand the message. Futhermore, CKTS also had difficulties because of the way Télémedia national advertising representatives operated. Normally, these representatives sold against the English media such as CKGM and CJAD, and thus had 259 difficulties in doing an about face to push CKTS, an English station. A different problem existed in Toronto where the agencies normally looked for numbers--and, the English-speaking population of the Eastern Townships represented a small market which often did not justify advertising expenditures. Additional problems for the prof itability of the station at this time came from the large promotion budget which was required to develop the French-speaking market, and the very liberal salary provisions of the 1975 collective agreement. Nevertheless, interviews reveal that the station returned to at least the breakeven point with this new strategy (although again the problems of interpreting profit figures because of cost allocations remain). There can, however, be no doubt that the cash flow of CKTS was greatly improved by the end of 1976. The reaction of the English community to the change in CKTS's format was not severe. Certainly, there were some isolated complaints from listeners and some former anglophone advertisers. Yet, the English population was basically dis- interested in CKTS: L-Peop.iil would say, we haven't listened to your station in three years...You can't please everybody. They weren't listening before and the station wasn't viable financially. We had had to go and get French listeners: how did we get them. We had to change the format.13

13Interviews with Employee D. 260

8.4 Constraints On Stategic Adaptation Two major periods of strategic change can be found in the decision streams of CKTS Radio. The first occurred in the mid-1960's and the second took place in 1975 when the station went after a new, francophone listening audience. In a similar fashion to the other organizations studied in this research, these changes are presented in a simple model in Figure 17 and 18. 8.4.1 Strategic Change - 1966 Clearly the most critical feature of CKTS's 1966 strategic change was that this change came after a very long period of stability in the station's strategic decision streams. Be- tween 1946 and 1966 CKTS had operated very much in the saine way; controlled by CHLT management, sharing facilities and salespersonnel with its sister stations, and depending on the C.B.C. for the more important aspects of its programming. The station had never received much attention and its function appeared to be one of preventing other groups from entering the Sherbrooke market. By the mid-sixties a number of changes had either taken place in the station's environment, or were of the verge of taking place. The anglophone audience of the station, while always small, was beginning to decline in relative importance in the region. Television had corne to the area and had drastically altered radio listening habits. After 1962, however, changes in the C.B.C. network service had reduced the ability of the station to cater to these new habits. In the mid-sixties FIGURE 17 g cd II

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-P u) a) cd 261 262 cable television was on the verge of creating a new era for television in the region. More importantly new competition in the Sherbrooke radio market, CJRS, had been granted a license. These events changed the competitive situation for ail of the CHLT group, CKTS included. It is evident that these changes, with the exception of the advent of CJRS were graduai developments. Since 1955 television had had a major impact on CKTS, but the local television station Télé 7 was part of the CHLT family, and thus not a major cause of concern. The final outcome of the general direction of ail of these changes, again with the exception of the effects of CJRS) were relatively predictable. The response of CKTS (or more accurately the CHLT management) which took place in 1966 involved a number of elements. The unprofitable weekly newspaper was dropped, the station became more independent adding its own sales force, and a middle of the road/country format emerged as the station did try to increase its revenues. C.B.C. reserve time was lessened where possible. Certain of these changes did involve conscious decisions to improve the profitability of the station, others just seemed to happen as the station received more attention and resources over a four or five year period. From being a rather unimportant part of the CHLT group, CKTS became a more active competitive element--the result was that the station began to develop its own identity. 263

Two constraints reduced the responsiveness of CKTS in adapting to the changes in its environment. The first was the fact that the station had flot developed a strong clientele amongst advertisers, and in 1966 there were fewer anglophone advertisers that could be tapped. Furthermore, CKTS did not have a strong following, or identity, within the anglophone community. The lack of attention to the development of CKTS in the early 1950's now made the task of building up a clientele more difficult. A second constraint was external. Government regulation and control over broadcasting restricted the station by making affiliation with the C.B.C. a condition of CKTS's license, and by dictating the type of programming the station had to broadcast. In summary then, the constraints on the strategic liberty of CKTS were both internal and external: INTERNAL CONSTRAINTS EXTERNAL CONSTRAINTS

- the station's past - government regulations decisions and lack of (moderate) identity (moderate) - dominance of other - a mall audience and parts of total organiz- clientele for advertising ation over CKTS (strong) time (moderate) 8.4.2 Strategic Change - 1975 In 1975 following the negotiation of a very costly collective agreement, a global change in strategy was made by CKTS Radio. CKTS had operated at close to its breakeven point, and had even managed to make small amounts of profits, in the •

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0—' P cH gl ••■ *1-4 d) +) 0 I-4 C..5 o cu cd o •H 'ci E-I -H -P .. o 0+ a) 4 ri) g).1 0 -,--1 ai H co = Q) o -p -.--1 cd cti u -P 0 .-1 '1:5 OH a) Cd H 1:/f) a) Z -H E rci X 1:1 CH 00 +) cd «,cC -H Q) C44 O Pi Ç'A 2 65 early 1970's. It appears that the economics of the station were completely thrown off by this change in costs. Other more graduai changes in the station's environment also contributed to this strategic change. One was the continued decline, however moderate, of the anglophone radio market. This trend, of course, had been going on for some time. A second environmental factor was the interest of young francophones in rock music, and the fact that CRTC regulations prevented French-language stations from fully satisfying this demand. Thus, a combination of environmental opportunity, and long term problems combined to bring about the need for a change in strategy. The strategic changes which were made completely altered CKTS as an organization. A rock-and-roll programme format was introduced, new more aggressive salespersonnel were hired, and an aggressive approach was taken with the CRTC. To implement this strategy at CKTS, Télémedia management took advantage of another environmental opportunity--the availability of management experienced in contemporary commercial formats. In other words, this process might be described as a form of pre- diagnosed matching: Télémedia had a problem at CKTS, the environment presented a solution (the management), and the solution was quickly adopted. Constraints on the implementation of this new strategy were both internal and external. The CRTC had to give approval for any programme change, and the change had to be 266 presented in a mariner which did not contravene C.R.T.C. policy. Perhaps because of the precarious nature of the station's financial position, the C.R.T.C. seemed less constraining during this strategic change than it had been in the previous ten years. Internally, a minor constraint existed in that certain of the more senior employees, who could not be released because of the collective agreement, had to be retained and brought around to a new way of doing things. The constraints on strategic adaptation during this period were thus; INTERNAL CONSTRAINTS EXTERNAL CONSTRAINTS - resistance of certain - government control employees to changing through C.R.T.C. the status quo (weak) regulat ion (moderate) 8.5 Summary In Chapter VIII the strategies of CKTS Radio were presented and analyzed. The first strategic period in the decision streams of this organization started in 1946 and continued until 1966. During this period CKTS was considered as a minor part of the CHLT group, and received little attention. In 1966, CKTS began to receive more attention and developed, to a certain extent, an identity of its ovin. Finally, in 1975 a global change was made in CKTS's strategic pattern when the station went alter a francophone audience with an English rock-and-roll music format. The coming of television, changed radio listening habits, increased local radio competition, and the decline of the anglophone radio advertising market were 2 67 the major environmental changes CKTS faced. Major constraints on CKTS's ability to respond to environmental forced included the lack of attention it received, its very small listening audience, and government regulation. CHAPTER IX

ENVIRONMENTAL CHANGE

9.0 Introduction The basic model used in structuring this research had as one of its key independent variables environmental change; in fact, the organizations studied were selected because it was felt, a priori, that changes which had occurred in the general environment they shared had created conditions which would have created a need for some type of strategic realignment. Chapter IX brings together a number of themes concerning environmental change which emerged in this research including a discussion of the ways the environment had impact on the four organizations, a description of the way the forces of the Quiet Revolution affected each organization, and a general description of the process by which environmental changes develop. 9.i Characteristics Of Environmental Changes 9.1.1 Multiple Changes The first point that should be made concerning the environmental forces which affected the four organizations studied is that the major environmental changes seldom developed alone in clear, straightforward manner. Usually, a combination of environmental changes hit these organizations at the saine time compounding the difficulties inherent in 2 69 adapting to a changed environment. Societal changes inter- mixed with specific industry changes created a very complex environmental situation because a given environmental change had to be interpreted within the context of what else was going on, especially within the context of the industry in which the organization operated. A number of examples give evidence to this point. Bish- op's University attempted to cope with the loss of student numbers brought about by the creation of Champlain CEGEP, while at the same time it tried ta cope with government rationalization of the university system in the province, and with pressure on its decision structures because of faculty and student demands for a say in what was going on at the Univer- sity. Similarly, the Sherbrooke Hospital at one point in the early 1960's had to attempt to deal simultaneously with the creation of the Faculty of Medicine at the University of Sher- brooke, with changes in medical practice particularly in obstectrics and pediatrics, with changes in the way hospitals were financed, and with growing government involvement in health care. The profit-oriented organizations studied in this research were, in a like manner, also affected by a combination of environmental changes. In the 1950's, The Sherbrooke Record faced growing competition from electronic media, changes in the structure of national advertising, and little growth in its traditional market. CKTS Radio was burdened with a 27 0 similarly low rate of growth in its then small market, and,of course) with ail of the effects the advent of television created. Later, this sanie declining market, new competition, changes in listening habits, and a militant union ail had impact on the organization. Complexity and sometimes turbulence (Emery and Trust, 1965; Terreberry, 1968) characterized the environments the four organizations faced j not because of the uncertainty brought by any one change, but rather by the fact changes in one environmental area affected the way other environmental changes developed. Moreover this complexity was heightened in situations where the final outcome of an important environmental change seemed uncertain. 9.1.2 Graduai Development A second characteristic of the environmental changes which occurred is that with certain exceptions the changes developed, for the most part, in a very gradual fashion. Table 7 outlines in summary form a number of characteristics of the major environmental changes which affected each of the four organizations studied including a description of the way each environmental change developed, and the actual period when each change became important. This summary indicates that most of the environmental changes developed slowly, and gradually affected the organization concerned. While certain shocks, or sudden events, did at times take place, it is clear that the major environmental

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(panup_uo0 273 changes genérallydid take some time to develop, and usually did not have significant effects on the organization for three or more years after they were first recognized. Even those changes which took place in an abrupt fashion often did not corne as a surprise to the organization--frequently early warning signais existed that a change was forthcoming. The implementation of Quebec Hospital Insurance was discussed for a number of years before it was implemented; thus, the Sher- brooke Hospital seemed well aware this sudden change in financing was coming. Similarly, the abrupt appearance of CJRS in the Sherbrooke radio while happening in a relatively short period of time ) was anticipated to a certain extent--operating in a near monopoly situation the CHLT group could have anticipated the eventual attraction of new entrants. Of perhaps more interest were those environmental situations where a graduai environmental change suddenly cornes to a head having abrupt effects on an organization. An example of this was the creation of the Lennoxville campus of Champlain College, and the pursuant loss of collegial students for Bishop's University in 1971: the collegial system was announced in 1966, but the specific environmental impact came on very short notice. The establishment of the Faculty of Medicine at the Universty also developed in a similar fashion, and it appears that this type of development process is characteristic of changes arising from decisions made in a political context: the overall direction of changes is known, but 274 the specific consequences for individual organizations often are made known in abrupt, or rather sudden, ways. . Resource_ dependency coupled with bureaucratic regualtion seems ta be a contributing factor making this tendency sa frequent. Per- haps the best example of this type of environmental change found in this research was the trend towards health care decisions in an area being made by a committee, or council, at the regional level, particularly after Bill 65. Although the general trend to an increasing role for the new regional decision making level evolved gradually and was predictable, the specific decisions arising from this level were, indeed, most unpredictable. The decisions of the Conseil Régional de la Santé et des Service Sociaux des Canton de l'Est (CRSSSCE) i especially involving changes of service at the Sherbrooke Hospital support this hypothesis very clearly. For profit-oriented organizations gradual environmental changes which are slowly evolving but which suddenly develop into environmental shocks, are usually related ta cash flow considerations, that is, lasses of particularly significant revenues (for example, the loss of a major client), or un- usually severe cost increases. New compeition for an organization's business may develop slowly, but the loss of a major account, or accounts is a sudden jolt. This type of jolt occurred at the Sherbrooke Record in 1962 after that organization had sustained a strike which resulted in the loss 276 did create some problems, generally this support was very welcome. Later developments which led to increased government contrai over both types of institutions obviously were problem stimuli, but these developments came some eight ta ten years after financial support was given by the government. A second point is that the opportunity created for CKTS to attract young francophone listeners was to a partial extent also a creation of government contrai (in this case, the federal government). The fact that limits were placed on the amount of English programming a French-language radio station could broadcast i created a niche which only CKTS, an English-language station, could occupy in the Sherbrooke area. Finally, the dominance of environmental changes which were first perceived as problems should not be surprising. The nature of the Eastern Townships environment for anglophone institutions as noted in Chapter IV,,was a difficult strategic environment for these institions. Thus, it seems logical that the environmental changes faced by the four organizations would be perceived as being more negative than positive. 9.1.4 Clarity Of Stimuli Another aspect of the environmental changes found in this research which is of interest ta students of strategic management is the relative clarity of the direction of environmental changes, and trends, from the time they first developed. Analysis of this clarity can be developed on different basis. The first is with respect ta the clarity of 275 of two important printing contracts. Similarly, CJRS created severe problems for the CHLT group, and CKTS in 1967-1968. Notable as well was the severe effects of postal rate increases on the Sherbrooke Record in 1968: increases which significantly affected the economics of publishing the paper given the large number of mail subscriptions The Record then had. 9.1.3 Evoking Stimuli A third characteristic of the environmental changes which had impact on the four organizations arises from how the stimuli were perceived by the organizations when environmental changes were first recognized. Table 7 clearly shows that, in general, the environmental changes which did take place were perceived by the organizations as being in the broad category which could be classified as problem stimuli. Only four opportunity stimuli could be found: increased government support of Bishop's University, increased student demand for university programmes, increased government support for the Sherbrooke Hospital, and growing interest of young francophones in contemporary English-language music. A fifth example, the opening of the Faculty of Medicine at the Univer- sity of Sherbrooke is properly classified as being perceived as both a problem and an opportunity stimulus. A number of points can be made concerning the above findings. First, it should be noted that while the advent of government financial support for hospitals and universities 277 the potential outcome of the final state of the trend, or change; for example, government financial support for universities and hospitals increased in the early 1960's, and it was clear that the government would be the principal source of operating funds for these institutions in the future. A % second basis for analyzing this clarity is with respect to the relative certainty of the consequences of an environmental change for a specific organization's performance, strategy, or some other aspect of its operations. Thus, while the final outcome of the trend towards increased government operating support for universities and hospitals was relatively certain, the specific consequences were not clear for either the Sher- brooke Hospital or Bishop's University. Obviously, great care must be taken in classifying environmental changes in this way because of the potential Mas in looking at these changes retrospectively--the benefit of hindsight creates a false impression that the direction of these changes and their consequences should have been rather clear to the managers of these organizations. Nevertheless, the fact that the decision streams of each organization were studied in great detail permits an increased level of confidence in the results of this type of classification. Indeed, the fact that the methodology used in this research does not depend exclusively on the intention of those involved in strategic decisions is clearly an advantage here. In reviewing the environmental changes it is clear that for ail of these organizations major environmental changes 278 involved an equal mixture of those which were certain with respect to their general direction, and those which were uncertain. Some changes and trends were easy to project into the future, others were not. Aside from this characteristic, little cari be said about the general direction of environmental change. More significant is the fact that in each case a much greater degree of uncertainty existed with respect to the specific consequences of environmental changes for individual organizations. A number of factors contribute to this state of affairs. One is that it is at this level that the interrelationship of different changes manifests itself with direct effects for the organization. These interrelationships flot only increase complexity, as noted earlier, by adding to the number of variables involved, but also by increasing uncertainty in the sense that even a relatively clear general trend in an organization's environnent must be interpreted with other more uncertain changes, or trends, affecting the organization. A second related factor is that environmental changes affect organizations differently depending upon individual resources, personnel, and other unique characteristics. It is just much more difficult to establish the potential effects of a general trend at the level of a specific organization. For example, both CKTS and the Sherbrooke Record were affected by increased competition.However, for the Sherbrooke Record this increaSed competition was the result of a general trend 279 involving the growth of electronic media. Thus, there was a great deal of certainty as to how these changes which had already happened elsewhere in Toronto, Montreal and other cities would affect the newspaper. Increased competition for CKTS, however, was a local phenomenon and involved many unknown variables concerning CJRS including the quality of the new station, the competence of its management, and the reaction of local listeners and advertisers. A particular form of uncertainty involving the specific organizational effects of environmental change can be found for changes involving the government. Because the exact consequences of this type of change depends on the issuance of regulations, and often the interpretations of laws, there is usually a great deal of uncertainty with respect to how an organization will be affected. 9.1.5 Specific Effects On Organizations Table 7 also shows a listing of how each of the major environmental changes which took place in the 1946 to 1976 period eventually came to have impact on the organization involved. This listing is particularly important because it presents the final phase in which an environmental change, or trend, eventually had a day to day effect on the performance, or decisions, of an organization. Clearly, the most common specific effect, or outcome, of environmental changes was on the revenue base of these organizations. In fact, in twelve of the major environmental 283 had an impact on the decisions made by those responsible for CKTS. This situation continued to prevail even after Télé- media purchased CKTS as evidenced by events following the 1974-1975 strike at the station. In contrast to the profit-oriented organizations studied, Bishop's University and the Sherbrooke Hospital were directly affected by the events of the Quiet Revolution in an important way. Government intervention in health care and education was an important feature of the 1960's in Quebec, and this intervention brought significant environmental changes for both organizations. The impact on Bishop's University had many dimensions: government operating grants turned Bishop's into a publicly financed institution, the reform of the Quebec educational system removed a year from the University's programmes, and system wide planning subjected the University to authorization and approval requirements in changing its domain. The resultant need for student numbers forced the University to broaden its clientele, and to rent space to a public CEGEP. Effects of the Quiet Revolution were similar for the Sherbrooke Hospital. Provincial health care legislation turned ail hospitals in Quebec into publicly funded institutions and eventually the massive amount of public funds allocated to health care necessistated a rationalization of services offered by health care institions. The granting of collective bargaining rights to health care employees also affected the 280 changes the final outcome was an alteration of the organiz- atiores revenue. This situation was true for both the non- profit, and profit-oriented organizations. Second in importance was the emergence of an environmental change as a specific constraint on the freedom of the organization to move in a particular strategic direction either through government regulation, through the establishment of an authorization process, or through changes in the organization's decision making processes. In only two instances did the major impact of environmental change emerge primarily in the form of important cost increases. 9.2 Impact Of The Quiet Revolution A second theme that emerges from the study of the environmental changes which had impact on the four organizations concerns the mariner in which the forces of the Quiet Revolut- ion had impact on each organization. The most obvious finding in this regard is that the profit-oriented organizations were affected in a much different way then Bishop's University and the Sherbrooke Hospital. Differences existed with respect to the directness of the impact of the Quiet Revolution, and with respect to the nature of the consequences for the profit-oriented as opposed to the non-profit organizations studied. 9.2.1 Direct Versus Indirect Effects For CKTS and the Sherbrooke Record the changes of the Quiet Revolution were fundamentally indirect in nature, and thus they seldom emerged as specific direct constraints for 281 these organizations. One of the principal effects for both organizations was the indirect impact of the Quiet Revolution in reinforcing the moderate decline in absolute numbers of the regional anglophone population. The point should be made that the anglophone population of the Eastern Townships had been declining, or in the case of certain counties had been relatively stable,throughout the 1946 to 1961 period. There- fore, the decline in the anglophone population cannot be at- tributed solely to the forces of the Quiet Revolution. Yet, it is also evident that prior to 1960, despite the rather stable markets, anglophone institutions in the Eastern Townships; on the whole, did not regard themselves as being in a low- potential, minority market; this perception arose after the Quiet Revolution began and was clearly visible by the mid-1960's. Related to this is another indirect effect of the Quiet Revolution. The social changes which took place in Quebec seemed to have the effect, in the case of the Sherbrooke Re- cord at least, of altering the mood of the paper's owners and managers. While it is not easy to substantiate such a position, the hesitant way that capital investments were approached and the fact that attention was often devoted to other organizational interests in more receptive markets seems to support this argument. CKTS, being owned by francophone interests, was not affected in the same way. However, it is hard to imagine that the station's owners were not influenced by the fact that the English market was not a growth market, and by 282 the fact that the relative importance of the anglophone community as a percentage of the regional population had lessened. A more direct effect of the Quiet Revolution on both CKTS and the Sherbrooke Record occurred in the mid-to-late 1960's when national advertising agencies began to pay more attention to French-language media. Interviews with personnel at both stations reveal that prior ta this time bath organizations did receive disproportionate amounts of national advertising dollars; that is, more dollars than their circulation or audience, justified. The Quiet Revolution seems ta have made national advertisers more conscious of the amount of promotional and advertising funds devoted ta French-speaking clientele--a change which hurt bath the Sherbrooke Record, and CKTS. Another more direct effect of the Quiet Revolution, labour militancy, also had impact on bath organizations. While it is true that the Sherbrooke Record only experienced one strike, during the period studied, in 1962, the strike was very costly for the newspaper. Similarly, the fact that CKTS employees were in a bargaining unit which included C1LT-Radio employees, and CHLT-TV employees, exposed the station ta very tough labour negotiations. Also, until 1968, the station was owned by a group which owned the strike-prone newspaper, La Tribune, as well. The poor labour relations climate which existed throughout the La Tribune/CHLT organization certainly 284

Sherbrooke Hospital as it did other hospitals in the province. The social protest and political uncertainties of Quebec in the 1960's also affected the ability of the Sherbrooke Hos- pital to attract anglophone doctors to its attending staff. Of lessor importance to the Hospital was the loss of its School of Nursing when reforms in professional education moved nursing training to CEGEP'S. Another major change which had impact on the Hospital was also an indirect result of the reforms of the sixties. It is clear that without provincial government involvement in health care and education, the Faculty of Medicine and the Centre Hospitalier Universitaire would never have been creàted. This indirect effect of the Quiet Revolution meant major changes for the Sherbrooke Hospital as it had to define a role for itself based on a regional health care system centered on the Centre Hospitalier Universitaire. The two non-profit organizations studied in this research, being closer to the major changes of the Quiet Revolution, were thus more significantly affected during the 1960 to 1970 period. Financial dependence on the provincial government transformed Bishop's University and the Sherbrooke Hospital from being anglophone institutions j which happened to be in Quebec, to Quebec institutions which happened to be anglophone. Gov- ernment involvement in health care, and in education at the university level, also resulted in uniformity of programmes and services throughout the province and lessened the ability 2 85 of both institutions to retain their distinctive identities. As basically public institutions, both the Sherbrooke Hospital and Bishop's University experienced a broadening of the clientele they served. 9.2.2 The Nature Of The Consequences Of Environmental Changes Differences also existed in the nature of the effects of the Quiet Revolution for the non-profit organizations. Unlike the effects on the Sherbrooke Record and CKTS which, while indirect, were basically negative, the Quiet Revolution had both positive as well as negative effects on Bishop's Univer- sity and the Sherbrooke Hospital. The forces of the Quiet Revolution which had impact on the Sherbrooke Record--reinforcement of the decline of the anglophone population, labour militancy—made The Record's task of coping with changes in national advertising revenues, and the growth of electronic media more difficult. At CKTS a similar state of affairs existed with the decreasing anglophone market, and militant labour making it more difficult for the station to adjust to the growth of television, and new local competition. The forces of the Quiet Revolution brought nothing positive for the two profit-oriented organizations. Increased government regulations, language legislation, and uncertainty in the anglophone community made an unattractive strategic demain even more difficult. On the other hand, the events of the Quiet Revolution had both positive and negative consequences for the Sherbrooke 286

Hospital and Bishop's University. On the negative side both organizations suffered in the decline of the anglophone community, and both had to give up a good deal of their autonomy because of government involvement. Neither institutions could continue to operate in a mariner which was independent of the total demands of the society as a whole. Yet, positive effects were also forthcoming. Similar to almost all hospitals in Canada j the Sherbrooke Hospital throughout the 1950's had suffered financial problems with inadequate resources for the services it had to provide. Public hospital insurance was most welcome because it guaranteed the Hospital financial resources and placed the financial burden for Hospital services in the lap of the provincial government. Although the Hospital's capital asset expansion programme was blocked by the creation of the Centre Hospital- ier Universitaire, the problem of balancing operating revenues and costs was no longer critical at least from 1960 to the early 1970's. For Bishop's University, provincial government involvement in higher education not only had the effect of providing operating revenue, but more significantly, it made th è task of building up the physical plant of the University much easier. The number of buildings which Bishop's constructed during the 1960's gives evidence to this argument. As note previously, the golden era of the University took place between 1958 and 1970: a period which corresponded with the 287 years of the Quiet Revolution. 9.3 The Process Of Environmental Change One of the areas of interest of this research was the mariner in which vague environmental stimuli, in what could be called an organization's second order environment, eventually developed to become specific constraints which an organization had to deal with--its first order environment. This interest was inspired by the work of Robert Ackerman who studied the mariner in which divisionalized organizations respond= ed to social issues. Of particular interest to this research was Ackerman's identification of the phases of organizational involvement based on the clarity of social issues to a corporation previously outlined in Chapter II. Phase 1 - social concerna exist but are not specifically directed at the corporation, Phase 2 - broad implications for the corporation became clear but enforcement is weak or even nonexistent, Phase 3 - expectations for corporate action become more specific and sanctions (governmental or otherwise) became plausible threats.1 This research attempted to explore the phases of environment change in a fashion similar to that of Ackerman to see if similar phases could be found, not only for social issues, but for environmental changes in general. Confirmation of

1R. Ackerman, The Social Responsibility of Business (Cambridge: The Harvard University Press, 1975), p.95. 288 phases similar to those of Ackerman were indeed, found. For the most part, this was not surprising given the rather general nature of the phases found in Ackerman's study. The three phases, however, were slightly different. 9.3.1 Phase 1 - Formation Environment changes or trends evolved from developments in society, in scientific knowledge, and in technology. Examples of developments in this category found during this research were many: Society - dissatisfaction with the prevailing social order in Quebec - growth of retailers, and other types of large powerful retailers - growing interest in society for higher education - dissatisfaction with the financing and availiability of health care - the development of manufacturing and other industries west of the Eastern Townships (Montreal and Ontario) - growth of more liberal attitudes in society and demands for more democratic organizations Science and Technology - technological developments in electronics which fos- tered the growth of radio and television - scientific advancements in medical knowledge and practice including vacines, birth control pills, surgical techniques, and new drugs - technological developments in medicine particularly in diagnostic devices - technological devices in printing particularly offset presses 9.3.2 Phase 2 - Direction The second phase of the development of environmental 289 changes was a phase where the general direction; or in Acker- man's ternis the broad implications, of these changes became known. Significantly, this research found that this phase could be described in summary fashion as a political phase because of the negotiations, debates, and power struggles which characterized this stage. In other words, the reason that the broad implications of environmental changes become clear is that society makes decisions in ternis of how social and technological changes should be handled. Again examples from this research can be used to illustrate this stage. Sometimes the broad implications, or general direction was established by legislation, or politically related activity. Unhappiness with the Quebec social order brought forth many alternatives--provincial government autonomy and intervention, the movement for independence, attempts at renewed federalism, violence, and terrorist activity. De- cisions also had to be made concerning higher education and health care: Should society take responsibility for financing these activities? How should demands for more open and eèal- itarian society be handled? Other environmental changes were resolved by negotiation, or power struggles, between the parties involved. In- creased labour militancy which also was resolved through legislation, and the struggle for control over advertising revenues between supermarkets , newspapers and manufacturers could be in this category. ;Technological developments were 29 0 uncertain until society made decisions as to how they would, or would not, be utilized. Sometimes these decisions were resolved through a formai procedure,for example, the passage of radio and television regulations, and sometimes they were left to be settled by public opinion and the clarification of society's values as with birth contrai. As was noted earlier in this chapter ) the direction phase was, with a couple of exceptions, very graduai. Clearly, the nature of the decisions made, and their importance for ail of society usually dictates a relatively long development process. 9.3.3 Phase 3 - Impact Phase 3 of the process of environmental change involved the way changes and trends had specific consequences for an organization. This stage was characterized basically as being economic in nature because until resource effects of a particular change were known, the exact consequences on constraints of environmental change for a specific organization could not be determined. Unlike Phase 2 which was graduai, Phase 3 of the environmental changes was often very abrupt; in fact, the development of the exact consequences of environmental change was almost equally split between graduai and abrupt cases. This phenomenon may help to explain one of the enigmas of strategic planning: Why do organizations, in certain cases, not plan for environmental changes even when there is little uncertainty about the general direction of the change, or 291 trend? Uncertainty about the specific consequences for an organization, and the possibility that the development of these specific consequences will be abrupt and make useless plans developed on the basis of more general information, may answer this question. Organizations may flot wish to make decisions until the economic consequences of changes in their environments are very certain. 9.4 Summary This chapter has analyzed the way environmental changes had impact on the four organizations studied. Environmental changes were shown to be multiple in nature, seldom developing in a clear, straightforward mariner. Most of the changes found developed slowly, and had a graduai impact on the organization. Most of the changes were of a problem type, with uncertainty existing as to the final outcome of the direction of environmental changes in about half the cases. Substantially more uncertainty existed with respect to the exact consequences of environmental change at the level of a specific organization. The effects of the Quiet Revolution were more direct for Bishop's University and the Sherbrooke Hospital than for the two profit-oriented organizations. In addition, while environmental changes arising out of the social changes of the Quiet Revolution were, for the most part, negative for the two profit-oriented organizations, they did have positive consequences for the two nonprofit organizations. For the four organizations as a group, it is clear 292-

that the social changes of this period had the effect of reinforcing the numerical decline of the English-speaking population. Each of these institutions was affected (although each in a different way) by this decline in the importance of the anglophone community. Three stages of development of environmental changes were found in this research: (1) formation, when the initiating social, technological, or scientific changes developed; (2) direction, when the broad implications of these changes for society were resolved in terms of how society would deal with these changes; (3) impact, when the specific consequences, of these changes became known at the level of a given organization. o CHAPTER X

STRATEGIC CHANGE

10.0 Introduction This research provided an opportunity ta study in depth many different strategic periods, and a number of different periods of strategic change in the four organizations. In fact, it was possible ta examine in detail nine different strategic change processes in the focal organizations. In this chapter, a number of issues concerning organizational strategy are discussed including the appropriate unit of analysis that should be used in researching the strategy con- . cept, an analysis of the general characteristics of strategic change, an analysis of the constraints on strategic adaptation in the four organizations, an examination of the strategic advantages and environmental opportunities found in this research, and finally an analysis of those factors which contributed ta strategic change in this study. 10.1 Unit Of Analysis One of the clear points that emerges from this research involves the appropriate unit of analysis that should be used in studying organizational strategy. While the profit-oriented organizations looked at in this research were particularly affected by this problem, non-profit organizations could have 294 been just as easily affected. The specific problem is that the unit of analysis which is most appropriate to use in studying strategy can change. For example, for the Sherbrooke Record little is lost in studying the newspaper alone between 1946 and 1951. However, between 1951 and 1968, the most appropriate unit of analysis that should be used appears to be The Toronto Telegram Publishing Company. In 1968, the appropriate unit of analysis reverts to the Sherbrooke Record. In 1969, with the purchase of The Record by Conrad Black and his associates a larger organizational unit, Sterling Newspapers must be used. These changes in ownership and changes in size of the overall organization suggest that the most appropriate unit of analysis in longitudinal studies must include the largest organizational unit to which an organization belongs. Attempts to decipher strategy, and the strategic change process ) which fail to shift with changes in what is the appropriate unit of analysis risk missing the rich logic of the strategy phenomenon. The logic may only make sense as part of the larger strategic unit. The strategies of CKTS Radio also illustrate this problem. Between 1946 and 1966 the strategies of CKTS must be interpreted within the context of the entire La Tribune/CHLT group of organizations. Later the station was part of Télé- media, and its decisions must be analyzed within the context of that organization. There can be no doubt that CKTS was 295 used as a competitive weapon in the Sherbrooke radio market: first merely to block competition; and later as a more active force when CJRS was created. Theoretically what this means is that the level of strategy which is appropriate cari shift from the business level (how an organization competes) to a corporate level (what business should an organization be in or concentrate on) as the definition of what the organization really is shifts. Where this shift in the level of analysis is important is in the examination of the constraints on strategic adaptation. Again the Sherbrooke Record can be used to demonstrate the problems which cari be encountered. The 1960's newspaper market was not particularly promising) with little growth potential. Local management advised John Bassett to diversify into commercial printing--a form of domain expansion. Bassett, of course, did not really act on this until it was too late. Nevertheless, Bassett in a sense had diversified out of the Eastern Townships by investing in The Toronto Telegram, and later CFTO and the CTV Network. While the Sherbrooke Record did not respond to environmental pressures, Bassett's total organizational interest, indeed, responded rather well. Interpretation of whether an organization was greatly constrained, or not, can thus be more difficult than it appears in certain contexts. Is an organization which eventually shifts completely out of an area into a new geographic 29 6 market (not ta mention new products or services) an example of superior adaptation, or total constraint! Definition of what exactly constitutes the unit of analysis--the specific local organization, the total corporate interest, or the individual's assets-determine what the answer to the question will be. If, in fact, decisions are being made on the basis of the whole organizational network, or on the basis of a portfolio of family assets, decisions at the level of a specific organization may seem rather illogical. 10.2 Characteristics Of Strategic Change Table 8 presents a number of different characteristics of the nine strategic change instances which could be examined in depth in this research. While the drawing of conclusions from such a small sample is not possible, the out- corne of analyzing these nine instances of strategic change, as a group, is interesting. 10.2.1 Specific Evoking Force The first dimension which can be used to characterize strategic change in these organizations involves the specific force, or evoking stimuli, which initiated change. In Chapter IX the environmental forces which created the need for some type of adaptation, or organizational realignment to environmental circumstances, were discussed. Thus, the specific evoking stimulus for strategic change is not concerned with the broader forces which precipitate change, but rather the specific incident, or action, which prompted a change in SUMMARY OF STRATEG IC CHANGES

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298 299 important decision streams. Unfortunately, an examination of Table 8 reveals little of a general nature. In two of the organizations, a combination of environment and internai actions prompted strategic change; in two others, either the environment, or internai actions, dominated. Even the profit- oriented/non-profit dichotomy did not reveal a pattern. 10.2.2 Proactive Versus Reactive Changes Of perhaps more significance is the tendency, not un- expected, for the two profit-oriented organizations ta be proactive, and for the two non-profit organizations ta be reactive. By this is meant that the management attempted to deal with environmental changes, problems, or opportunities before an environmental event required an action, or response, which could not be avoided. Of the four major strategic changes which took place in the decision streams of Bishop's University and the Sherbrooke Hospital only one was clearly in the proactive category; the 1971 change in strategic pattern of the Sherbrooke Hospital. On the other hand, none of the strategic changes of the Sherbrooke Record, or CKTS were evoked by the need ta respond to a specific environmental incident which management could not avoid. Two instances of emergent strategies were found in this research; the 1957 growth strategy of Bishop's University, and the 1966 strategy at CKTS Radio by which that station developed a distinctive identity. Both of these strategies were emergent because the strategic pattern of each organiz- 300 ation changed without any real conscious attempt ta take either of these organizations in the direction they ended up following--the strategic change was not deliberate. Signif- icantly, both of these emergent patterns involved growth strategies. It is clear that a majority of the strategic changes found in this research (seven out of nine) could be classified as deliberate in the sense that management had a relatively clear intention when it made shifts in important decision streams. This was especially true of retrenchment type strategies which were ail obviously quite deliberate. Although only three periods of retrenchment strategy were foui-id in this research, the strength of the intended action in these cases suggests that emergent strategies in retrenchment situations may be quite rare. Organizations just do not cutback operations, or eliminate certain of their activities, in this fashion. Retrenchment is a conscious strategy with relatively clear objectives. Also, rare in this research were instances of global strategic changes where an organization drastically alters its strategies, structure, and methods of operation. Two such instances were found in the four organizations studied, and involved the profit-oriented organizations. A global change took place at the Sherbrooke Record in 1969 when The Record completely altered the quality of newspaper product it would offer; its entire approach ta news and advertising 301 changed. Similarly, the 1975 change at CKTS Radio involved a new target listening audience, a new programme format, a new commercial policy, and a new approach to the government regulation. It should be noted that one of these global strategic changes involved what was essentially a retrenchment strategy; the other involved a growth strategy. In both cases the global shift in strategy took place only after a new management took control of the organization. 10.2.3 Decision Processes Other characteristics of the strategic change process not summarized in Table 8 concern how strategic choices were made in each organization--individual or group decisions, negotiation, or bargaining--and the degree to which these choices were made known to members of the organization, and interested outsiders. Before looking at these two characteristics the point should be made that the two organizations within each category, profit-oriented or non-profit, were similar to each other. Both profit-oriented organizations were entrepreneurial, small, and had simple structures. Both non-profit organizations were professional bureaucracies and were of approximately the same size. Strategic choices àt the Sherbrooke Record were made in a similar fashion. In the early years of the period studied, decisions were clearly made by the entrepreneur. While a process of selling had to take place to convince John Bassett to have the Sherbrooke Record move into commercial 302 printing in 1951, the decision was Bassett's. The absence of debate or negotiations was even more apparent in The Record's 1969 and 1973 strategic changes. The only incidence of bureaucratic delay in the decisions of The Record came during the 1960's when the staff of The Toronto Telegram became more involved in the newspaper's affairs; this activity, however, did not result in strategic change. The 1966 strategic change at CKTS was made without a great deal of debate or negotiation (being emergent ) only individual decisions could have been discussed in any case). The station manager made some changes, the entrepreneur agreed. Even in the 1970's when CKTS was part of Télémedia, similar decision processes took place. Group executives decided to change the station's market, approval was granted, and implementation was left to the new management of the station. No evidence of bargaining, or debate could be found. Three of the four strategic changes made at Bishop's University, and the Sherbrooke Hospital involved strategic choices being made by a dominant group, or coalition; and there was little debate or negotiation in these decision processes. Although the 1957 strategic change at Bishop's Uni- versity was more emergent than deliberate, those decisions that were made ) were made by the Executive Committee with little discussion. Both strategic changes of the Sherbrooke Hospital involved key members of the Medical Staff and certain members of the Board of Governors, again with little debate, 303 negotiation, or discussion. The fourth strategic change of the non-profit organizations (1971 strategic change of Bishop's University) was, however, very different. The University's decision processes had changed, and it appears the power structure of the organization had shifted. A process of negotiation took place involving how retrenchment should take place, who would be affected, and what should be done so that Bishop's realigred itself to its changed environment. Debates, discussions, and negotiations dominated this strategic choice process. 10.2.4 Explicitness Uniformity also existed in the manner in which the four organizations made their new strategies known to members of their own organizations and interested outsiders. Two different categories cari be used to explain this characteristic of strategic change in the four organizations. Firstly, if a change was noncontroversial in the sense that it would not bring forth debate or adverse reaction, either externally or internally, the strategic change would usually be explicit within the organization but would be implicit outside the organization. For example, the Sherbrooke Record's 1951 move to commercial printing was essentially noncontroversial, and was, thus, rather explicit. This was also true of The Record's 1973 return to commercial printing. The two incidents of emergent strategic change were also in this category. The 1957 growth strategy of Bishop's University 304 and the 1966 growth strategy of CKTS were not deliberate but were explicitly discussed within the respective organizations after they were recognized. The latter portions of periods of emergent strategy do not necessarily involve directions which are unrecognized by members of those organizations. A second category of strategic changes,those which were controversial, were not made explicit either within the organization or to outsiders. Clearly, the more important strategic changes studied in this research were in this category; the 1971 changes at Bishop's University which lowered academic quality, the new more aggressive approach of the Sherbrooke Hospital in 1971, the changes in the Sherbrooke Record in 1969, and the shift to a rock-and-roll format at CKTS in 1975. In each of these cases the true nature of the strategic change which took place was not explicitly made known either inside or outside the organization. The fact that the organizations studied in this research were "cultural" organizations,important to the anglophone community of the Eastern Townships, has something to do with this lack of explicitness. Related to this was the nature of the public announcements which these organizations were,from time to time, com- pelled to make. Surprisingly, this requirement was quite common for each of the organizations in this research. Whether it was required because of an annual meeting as in the case of Bishop's University or the Sherbrooke Hospital; or because of government regulations, funding, or planning as with CKTS, 305

Bishop's University, or the Sherbrooke Hospital; or because of the need to justify changes in product offerings as in the case of the Sherbrooke Record; each of the four organizations was forced to make a public statement of its goals, direction, or intended strategy. Two points cari be made with respect to these public announcements. The first is that e if the organization was in the process of changing its strategy e these announcements were so general, or incomplete, as to be next to useless in ander- standing what the organization was actually doing. This was particularly true of Bishop's University's brief to the Conseil d'universités the Sherbrooke Record's description of what it was doing to change the newspaper in 1969, and CKTS's Promise of Performance submitted to the C.R.T.C. A second point is that when specific public announcements of intended strategy were made, they were made well after the fact when the announced changes were well on the way to being implemented. 10.3 Constraints On Strategic Adaptation Table 9 summarizes the constraints on strategic adaptation of ah l four organizations which were developed in Chapters V through VIII. Caution again, must be taken in drawing general conclusions from this rather small sample, nevertheless certain points drawn from this summary are significant. The first point that should be made concerns the importance of internai constraints in limiting the strategic adapt-

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307 rn • 30 8 ation of these four organizations. On the whole, internai constraints were either as important, or more important, in limiting the length of time it took for strategic action to be taken or in limiting the range of such action, in seven out of the fine strategic change periods found in this study. Internai constraints of at least moderate strength were found in ail nine strategic change processes. Certainly external constraints were also important in limiting strategic adaptation of the four organization; yet, given the rather obvious difficult and declining nature of the environment of each of these organizations, the strength an.dpervasiveness of internai blockages to change seems surprising. In terms of frequencyl the most common internai constraint found was the past decisions of these organizations ) which had led to the creation of a strong identity in three of the four organizations. Again it should be stressed that ail four of the organizations were service organizations important to the English-speaking community. Complicating attempts at strategic change then was the fact that Bishop's University, the Sherbrooke Hospital,and the Sherbrooke Record were successful in what Selznick (1957) has described as the institutionaliz- ation of purpose; each had an identity or a personality which had been acquired because of past success. Employees, clients and benefactors had corne to expect certain services, methods of operations, and performance levels from these organizations; and these expectations were difficult to change. It was not so much that this embodiment of institutional 309 purpose prevented a change in strategy from taking place, but rather it slowed down the process by which the organization could adapt ta environmental pressures, problems, and opportunities. One of the ways this happened was through the use of organizational slack ta buffer environmental changes. For example, the strong identities of both Bishop's University and the Sherbrooke Hospital allowed these organizations ta conduct successful financial campaigns which raised substantial amounts of resources for each organization. Even with government funding and control, both organizations were able ta retain more independence than similar organizations in the province which did not have access to such funds. However, this buffering had another effect: it limited these organizations from making any strategic changes which might alter their identities (particularly as English institutions) and lessen the support of their benefactors. Adaptation could only take place at a rate which would be acceptable ta supporters; to do otherwise would essentially destroy these organizations. Adding ta this slowness in responding ta environmental change was the fact that employees,managers, owners and others connected with these organizations had vested interests, or at least were comfortable with the status quo. This was particularly true for the employees of Bishop's University and the Sherbrooke Record, and for the Board of Governors of the Sherbrooke Hospital. 310

Ironically, CKTS which did not have a strong institutional identity was both hurt and helped by this state of affairs in trying to make strategic change. Efforts in 1966 to move ta a growth strategy and develop a market for station's advertising time were limited by the lack of attention paid ta CKTS in its first twenty years of existence. On the other hand, this same lack of a strong institutional identity allowed the station to make a global change in strategy when CKTS changed its format in 1975. Few complaints were received from the anglophone community when the station went after francophone listeners with a rock-and-roll format--the anglophone community did not really care. The values of owners, or members of the dominant coalition, in each organization were also a factor limiting the freedom of these organizations ta change strategic direction. This was particularly true for the Sherbrooke Record and Bishop's University. In the case of the two profit-oriented organizations, strategic change was postponed, or delayed, at points for no other reason than the fact the owner wanted a particular type of organization, even if profits were not earned ta the extent they could have been earned. For bath profit-oriented organizations studied ) an important constraint on their ability ta adapt ta environmental change was the dominance of other organizational interests of their owners over their specific organization. Particularly between 1955 and 1968 for the Sherbrooke Record) and for the 311 first twenty years of CKTS's existence, both organizations were regarded as being relatively unimportant, perhaps because of their lack of growth potential. This lack of attention delayed strategic change even when lower level management responsible for these organizations wanted to take action. Lack of funds for capital investment purposes was the way this lack of attention manifested itself at the Sherbrooke Record; whereas at CKTS it took the form of the perception of the station as really nothing more than a blockage to prevent new competition from competing with the CHLT group. Externally, two types of constraints on strategic adaptation were significant for the four organizations: government control and regulation, - and competition. Three out of the four organizations (ail except the Sherbrooke Record) faced important governmental constraints on their actions. The process by which governmental constraints developed for both Bishop's University and the Sherbrooke Hospital is clear: government financing led governmental restrictions on the ability of both organizations to independently choose the types of programmes or services they could offer. A similar sequence of steps involving government control was found in both cases: 1) acceptance of capital investment funds from the provincial government 2) increased government grants for operating funds 3) increased government control over capital investments 4) system wide planning and rationalization of services 5) increased government control over operating funds and operating activities 31 2

As pointed out earlier, this growing dependence on the government was a very graduai process, and had the effect of making both institutions, although clearly still anglophone in perspective, much more Quebec oriented. Government constraints on CKTS were of a much different sort. Firstly, the regulator was a federal government body concerned with the development of a national identity; thus, it basically was concerned with the programming content of the station. This hurt the commercial viability of CKTS. In a very real sense, the federal government through the C.R.T.C. defined what the organization's product would be--a major constraint on strategic choice. Competition was also an external constraint for ail of these organizations with perhaps the exception of Bishop's University. For the Sherbrooke Record and the Sherbrooke Hospital competition in potential new domains was significant. Also, the level of competition intenified for both organizations in the latter half of the 1946 to 1976 period. Examination of Table 9 reveals another characteristic of these constraints: in a number of cases a particular constraint declined in severity from one period of strategic change to the next. For example, government regulations were significant constraints on the strategic decisions of the Sherbrooke Hospital during the 1963 to 1970 period but lessened after 1970. Similarly, the identity and past decisions of the Sherbrooke Record became less important in limiting 313

strategic change in the 1970's. Finally, the influence of other stations in the CHLT group, and the control of the C.R.T.C. were both less significant in 1975 than they were in 1968 or 1970. The mariner in which these constraints weakened is, of course, of major interest to the study of strategic management. In the case of the Sherbrooke Record) the coming of new proactive management j who did not have the saine attachment to The Record as an institution i was the reason for the change. This was also the case with CKTS in that new owners, and new management, were willing to approach the organization with a new perspective, and were also willing to attempt to reduce C.R.T.C. control over the station. New management was not a factor in the new approach taken by the Sherbrooke Hospital; rather key decision makers at the Hospital just decided to act more independently with the government through a strategy of using the organization's privately generated financial resources. Significantly, changes in management or changes in the will of management to attempt certain actions were important not only in reducing internal constraints (as might be expected), but as in reducing external constraints which at one point seemed restricting and uncontrollable. 10.4 Environmental Opportunities This research has shown that the environments of each organization studied presented numerous problems and pressures with which these organizations had to deal. Yet, 3114,

these saine environments also presented opportunities and solutions to assist in the process of strategic adaptation. Examples cari be drawn from each organization to illustrate this point. There cari be little doubt that Bishop's University was negatively affected by the implementation of the CEGEP system of education in the province. The consequence of this event which developed out of the educational reforms of the Quiet Revolution was a drastic reduction in Bishop's enrollment. However, during the 1971 to 1976 period, other changes in the University's environment provided opportunities including: strong demand for business administration courses, a_program- me Bishop's offered; increased demand for extension and continuing education courses; and growing interest in Bishop's on the part of the francophone students. For the Sherbrooke Hospital the creation of a university hospital in the region effectively blocked the Hospital's expansion plans, but it also allowed the Hospital to have access to residents and interns, and to specialize in what it could best do. A perceived negative environment may have discouraged anglophone doctors from coming to the Sherbrooke area, yet later this saine environment provided many new members on active staff once the Centre Hospitalier Universitaire was in operation. The Sherbrooke Hospital's location in an expanding area of Sherbrooke also presented an opportunity especially after the provincial government nationalized health care. Franco- 315 phones began ta use the Hospital's Out Patient service and later made up a significant percentage of admitted patients. This growing francophone clientele meant that the Hospital never really felt the effects of the declining population; if anything, its activity statistics show that it was being used more than ever. CKTS is perhaps the most obvious example of an organization which made use of an environmental opportunity to salve other long term, problems also stemming from other aspects its environment. The station effectively became a francophone station that happened to play English music, and in a manner of speaking, the organization's ethnicity became its product. The result of this action were dramatic as the station for the first time in its existence was in a position where it could make significant profits. The sanie type of environmental opportunities enjoyed by Bishop's, the Sherbrooke Hospital, and CKTS did not exist for the Sherbrooke Record. These three organizations basically went on doing what they had traditionally done ) offering the saine, although modified, types of products or services to a new clientele which now included francophones. This was n not easy ta do for the Sherbrooke Record because its product, an English language newspaper, had no attraction for the vast majority of residents of Sherbrooke. Thus, The Record had ta came up with a new product, commercial printing, which would allow it ta expand or maintain its revenue base. Nevertheless, 316 an environmental opportunity existed. Two points emerge from these environmental opportunities. The first is that these opportunities either developed from changes and events unrelated to an organization's past actions, or they developed from earlier decisions taken by the organization (the introduction of Business Administration at Bishop's University in 1958, the decision by the Sherbrooke Hospital to participate in the development of the University of Sherbrooke Faculty of Medicine). A second point concerns the timing of organizational response to environmental opportunity. For the most part, full benefits of environmental opportunities, especially those that present themselves and are unrelated to previous organizational decisions, were only received if the organization acted at the appropriate time. Some of the organizations studied were good at this, others were not. For instance, the Sherbrooke Record missed a real opportunity to place itself in the Eastern Townships commercial printing market because Bassett did not approve the necessary investment until 1967--and, at that point it was too late. Bishop's University might have more successfully reoriented its programmes had it acted before 1971 when faculty control over the University's decision processes increased. On the other hand, the Sherbrooke Hospital took full advantage of the chances it had in the 1970's to rationalize its services) dropping low utilization areas adding Intensive Care and 317

Forensic Psychiatric Units. And, of course, CKTS reacted quickly in bringing in management experienced in implementing rock-and-roll formats in 1975. 10.5 The Management Of Strategic Exit Normally, prescriptive management literature emphasizes the role of environmental opportunities in bringing about strategic adaptation. In this research, however, what was perhaps equally important in determining the success of strategic change was the mariner in which an organization abandoned, or exited, from its previous strategic decision pattern. One cause for this particular state of affairs perhaps was the fact that these institutions were important to the anglophone community of the Eastern Townships and changes in strategy were not taken lightly, especially those that could be perceived as an abandonment of the traditional clientele. An- other was the fact that three out of the four organizations studied had been quite successful in embodying an institutional purpose: they had identities and certain styles, which their clientele, supporters, and employees recognized and expected. Improperly managed strategic exit very easily could have resulted in these organizations losing their traditional basis of support before new basis had been built up. Not surprisingly, those organizations that were more successful in managing the exit from their past strategies were also more successful in reorienting their future direction. The Sherbrooke Hospital was very successful in this 318 regard. Even with government financing and control of health care institutions in Quebec which turned hospitals into essentially public institutions, and even with the abandonment of certain services important to its traditional clientele; the Sherbrooke Hospital managed to maintain the support of the anglophone community. A number of actions contributed to this success: solid public relations, the downplaying of the negative aspects of strategic change, success in convincing the public that the financial support of the community had to be maintained. Later, faced with severe problems of maintaining the support of the anglophone elite of the community because of changes to its board under Bill 65, the Hospital created a foundation thus retaining the interest of a group important to the Hospital's success. Bishop's University was less successful in managing exit both from its pre-1957 strategy when it started to grow during the 1960's, and certainly from its pre-1971 strategy when it attempted to change its strategy during the early 1970's. In the 1960's the University was burdened by the fact that those who were in positions to implement strategic change were ill-equipped to handle such a task: a growth strategy emerged in a fashion which later caused severe problems for the organization. In 1971, Bishop's overreacted ta demands for changes in the structure of its decision- making process; thus, the retrenchment strategy that developed was less than complete, and the University continued to 319 have reorientation problems throughout the 1970's. An opportunity to correct some of the excesses and mistakes of past strategic periods had been missed. In retrospect, it is clear that faculty and organizational goals were incongruent; younger faculty who were attracted to the University during more prosperous years were unwilling to change. Fortunately, for Bishop's it was successful in maintaining the support of the anglophone business elite of the province. Nevertheless, it had missed an opportunity to realign its programmes and resources to the new environmental situation it faced. Plans were presented, but never acted upon--too many of those making decisions had a stake in the statua quo. Growth did take place in business and continuing education programmes; but this growth took place despite faculty disinterest, and despite poor resource support in both areas. The eventual retrenchment and reorientation of the Sherbrooke Record can only be described as painful and abrupt for that organization's employees and clientele. Delays in taking the necessary steps to change The Record's strategy meant that when strategic change was introduced by its new owners it was extremely costly: costly on a personal basis for the newspaper's long time employees, and costly for the organization itself in terms of its support and image in the anglophone community. A number of causes can be found for the failure of the 32 0

Sherbrooke Record to abandon its outdated pre-1951 strategy. One was the owner's values which resulted in strong commitment ta a certain type and quality of newspaper. An- other was the inattention of the owner, and his preoccupation with organizational ventures in more growth-oriented environments. Later, during a brief period of local ownership commitment to employees and poor economic conditions limited strategic change. The buffering effects of The Toronto Tele- gram in subsidizing the organization also contributed to this situation. Again failure to abandon a previous strategy made strategic change more difficult. Strategic change at CKTS Radio was not as affected by the failure to abandon previous strategies. The radio station did not really begin to develop as an organization until after 1966. No strong commitment to the 1946-1966 strategic pattern existed either from within, or from outside, the organization. Similarly, there was no strong commitment ta the 1966 to 1975 strategy when strategic change was made in 1975, probably because the station's performance had been sa poor. CKTS had never built up a strong identity, and certainly had not been successful in embodying institutional purpose. 10.6 Factors Contributing To Strategic Change In reviewing the nine different strategic change processes found in these four organizations, it is possible to list a number of factors whose prescence facilitates the exit from one strategic pattern, and the establishment of a new pattern better adapted ta a changed environment. 321

First, if the personal interests of those making strategic choices will not be negatively affected by a new strategy, strategic change is facilitated. This point which, perhaps, appears obvious is often neglected in strategic management literature. For example, although certain doctors on the staff of the Sherbrooke Hospital had to alter their practices when the Hospital made changes, the personal situations of key decision makers were not negatively affected. If anything, changes made at the Hospital advanced their careers and supported their areas of interests. This cari be contrasted with Bishop's University where many of the pro- posais to reorient the University after 1971 would have resulted in those who were participating in the decision ta adopt these changes losing status and prestige within the organization, or even their jobs. Second, if subunit goals cari be achieved through a new strategy, and this fact can be demonstrated and accepted, strategic change is facilitated. Only in rare situations do most subunit goals in an organization flot provide sufficient latitude such that certain changes in strategy cannot satisfy these goals equally as well as the previous strategy. While certain individuals might be less well off under a particular change in strategy as noted above, and sometimes an entire subunit will be adversely affected, this is not usually the case. One of the criticaltasks then in managing strategic 322

change is the Consideration of important subunit goals in the selection of strategies, and the demonstration of how a new strategic pattern will allow these goals to be achieved. Both Bishop's University and the Sherbrooke Hospital were, for instance, successful in demonstrating fo either the anglophone elite of the Eastern Townships ? or(in the case of Bishop's) the Montreal anglophone elite,that the goals of these groups could still be satisfied within the constext of new strategies. In a like fashion, certain employees of CKTS and the Sherbrooke Record enthusiastically welcomed strategic change because their financial security would be maintained after changes were made. Third, when certain subunits making up an organization will be negatively affected, or if certain aspects of strategic change is likely to reduce support for the organization, strategic change is facilitated if explicit statements of strategic intention are not made. This point which has been noted by Tilles (1966) and others is well demonstrated in this research. Clearly, this study showed that few public announcements of strategy were made by these organizations, and for the most part, strategy was not made explicit. Muddled intention seems to serve a useful purpose in the strategic change process. The Sherbrooke Hospital was particularly adept at muddling its intention especially in the way it went about abandoning its pediatric service. The process was graduai, and at each step alternative explanations as to why a particular action was being taken could be given. 323

Eventually, when it was clear that public acceptance of such a move existed l an announcement was made--well after the service had de facto ceased to exist. CKTS also resorted to this tactic when it presented its Promise of Performance to the C.R.T.C. in 1975. A clear statement of its true intentions with respect to its new format would probably have scuttled the strategy. It could be argued that one of Bishop's University's problems in the 1970's was that its new more open decision processes made its intentions too clear and toc explicit. This problem was also a very real one for both CKTS and the Sherbrooke Record. In each case because of the nature of the products each firm offered to the population, quality changes were visible and quickly perceived by supporters. A fourth factor which facilitated strategic change in the four organizations concerned the prescence of external threats to their survival which usually were of a financial nature. Threats were useful in the sense that they act as a catalyst to soften the resistance of certain groups to the point that strategic change is accepted. Each of the four organizations experienced this phenomenon. Bishop's Univer- sity was threatened with the loss of government grants in 1971, and this threat clearly contributed to whatever reorientation of the University took place. The Sherbrooke Record was almost closed in the late 1960's: a state of affairs which lessened the negative response of the anglophone 324

community when quality cuts were made in the paper in 1969. Also, the financial consequences of the 1974-1975 strike of CKTS surely created a mood receptive ta drastic strategic changes on the part of Télémedia executives. While the major threat to the Sherbrooke Hospital came in 1978 after strategic changes were made, that organization ta a large extent built its identity and its broad basis of support by reference ta its lack of operating revenues prior ta 1960, and by the need to upgrade facilities after 1960. The anglophone community was made aware of the fact that if it wanted to retain quality health care within the context of an English-speaking institution, it would have ta support the Sherbrooke Hospital in a financial sense, and in the strategic changes the Hospital was required to make. Closer examination of how external threats to an organ- ination's resources contributes to strategic change highlights the critical raie of uncertainty in this process. Confusion and unpredictability created by the breakdown of existing patterns of organizational action magnifies the benefits that might be received through the adoption of a new strategic pattern. If nothing else, à new pattern allows an organization ta put some structure on reality: a structure which in many cases reduces the confusion and uncertainty of staying with the status quo. 10.7 Summary Chapter X has summarized the findings of this research 325 with respect ta strategic change. Difficulties with the establishment of the appropriate unit of analysis were first explored e particularly the need to study the largest organizational unit ta which an organization belongs. Secondly, the characteristics of the strategic change situations found in this research were probed with respect to specific evoking stimuli, with respect ta the degree of proactivity, and with respect to other decision variables. The major constraints on strategic adaptation were then presented including those involving internai limits on strategic discretion. The importance of managing strategic exit was shown to be very cri:Eràal in the four organizations. Finally, a number of factors which contribute to strategic change was listed. CHAPTER XI

CONCLUSION

11.0 Introduction This research has attempted to provide an answer to the question of how organizations are constrained in adapting ta slowly-evolving changes in their environments which threaten the relevance of their traditional products and markets. Specifically, it has looked at changes in the important decision streams of four English-oriented organizations in the Eastern Townships of Quebec between 1946 and 1976. In Chapter I the major objectives of this study were given: 1) ta explore the process by which environmental changes have impact on an organization, 2) ta detail and analyze the constraints on organizational adaptation to environmental change, and 3) ta examine the relevance of the concept of organizational strategy, and the meaning of strategic choice, for smaller organizations. In this Chapter, a summary of the major findings of this research is presented, and the implications of these results for strategic management are discussed. 11.1 Changes In The Four Organizations The four organizations studied in this research experienced a number of significant environmental changes, and 327 in response altered their major decision streams in important ways between 1946 and 1976. Thus, before analyzing the meaning of the findings of this research, it is useful to review exactly what happened in each of these organizations. 11.1.1 Bishop's University Bishop's University was in 1946 a small, residential college whose physical plant was in need of modernization. This modernization took place between 1947 and 1951 under the leadership of John Molson ., the first lay president of its corporation. Few other changes took place in the University at that time, however, and until 1957 a very modest rate of growth was experienced. Two significant environmental changes took place in the late 1950's both of which had an important impact on Bishop's University; government funds became available to finance expansion of the university sector, and student demands for university-level programmes increased sharp- ly. No clear decision about growth took place at Bishop's-- growth just happened. The University's student enrollment increased; new faculty were hired; programmes were added, and the physical plant was greatly expanded. For Bishop's, the 1957 to 1970 era was very prosperous. The coming of the CEGEP system was a key event in Bishop's history. To assist in the transition to the collegial system, the University agreed to implement a two year, collegial equivalent programme beginning in 1969. However, in 1971 this programme was terminated when the provincial 328 government announced the creation of a public English-language CEGEP in the Eastern Townships. The size of both Bishop's student enrollment and faculty were reduced dramatically. Eventually, Champlain College was established on Bishop's campus in quarters rented from the University. At about the saine time, the University's decision structures were altered to accomodate faculty and students demands for participative decision making processes in the University. The substantial rights, and powers given to the faculty in 1971 greatly constrained attempts at reorientation of Bishop's during the 1970's. While continuing education and business administration developed during this period, no explicit strategies to adapt the University to its new environmental situation as a three year institution were implemented. The clientele of the University did change, however, coming from a much broader base of Quebec society. 11.1.2 The Sherbrooke Hospital Similar to Bishop's University, the physical plant of the Sherbrooke Hospital was completely rebuilt after World War II. A modern hospital building and a new nurse's residence were both constructed around 1951. Other major decision streams of the Hospital remained quite stable throughout the 1950's and early 1960's. The problems experienced by the Sherbrooke Hospital were identical to the problems experienced by ail general care, community hospitals of that period. Es- sentially the revenues of the Sherbrooke Hospital obtained by 329 charging patients were inadequate to cover the expenses of the various services the Hospital was expected to offer. Fund raising through an extensive campaign organization allowed the Sherbrooke Hospital ta carry on its activities prior to the advent of provincial hospital insurance. Although at times the problem of obtaining adequate intern help was severe, the Hospital did not have trouble attracting doctors to its active staff during the 1950's. Two significant environmental changes happened for the Sherbrooke Hospital in the early 1960's. In 1961 Quebec Hospital Insurance was established,and in 1962 a project ta build a medical school at the University of Sherbrooke was initiated. The presence of a university teaching hospital in the area greatly altered the Sherbrooke Hospital's expansion plans. Government funds were just flot available for the other projects in the Sherbrooke area. Other environmental changes involved changes in the practice of medicine, the use of increasingly sophisticated equipment, and regional planning of health care facilities. Critical decisions made by the Hospital at this time were to participate in the University of Sherbrooke project, and to modernize facilities within the context of the existing hospital building. In 1971, the Sherbrooke Hospital acted unilaterally to make majoralterations in its facilities and services. Be- tween 1971 and 1976 pediatrics and obstetrics were abandoned and replaced by other activities. Outpatient resources were 330 upgraded, supporting the very rapid growth of that area at the Hospital. Closer ties with the University of Sherbrooke and the decision to emphasize Family Medicine led to a number of francophone doctors joining the active staff of the Hospital in the 1970's. By 1976 about one third of the Sherbrooke Hospital's patients were francophone. 11.1.3 The Sherbrooke Record The Sherbrooke Record in 1946 was a somewhat folksy, family-owned business offering rather good quality news coverage. In response to initiatives of local management, The Record branched out into commercial printing in the early 1950's. The newspaper's owner, John Bassett, developed other organizational interests in Ontario during the 1950's and 1960's; and while The Record was partially subsidized by these other operations, The Record did not receive a great deal of its owner's attention. Throughout the 1950's, The Record experienced the growing impact of changing national advertising structures, and of increased competition from electronic media. A 1962 strike resulted in severe damage to the newspaper's commercial printing activities. In fact, from 1964 to 1968 The Record lost money. After a great deal of delay, The Record's local management convinced Bassett to purchase a new offset press in 1967; however, implementation problems exacerbated the newspaper's losses, and these increased losses led to Bassett's sale of the organization in 1968. After a brief period of local ownership by the former 331 president and general manager, and another Sherbrooke business- man, The Record was sold to a group headed by Conrad Black. This sale did not include The Record's new offset press which was sold separately to another buyer. Black and the other new owners completely changed the Sherbrooke Record. Staff were let go, the quality of the paper was changed, and the generation of _advertising revenue dominated other activities of the organization. Although circulation dropped after these changes, the newspaper was again profitable. In 1973, the Black group purchased a new offset press and the Sherbrooke Record reentered the commercial printing field. 11.1.4 CKTS Radio CKTS Radio was created by the owners of La Tribune newspaper who also owned CHLT Radio in 1946. For the first twenty years of its existence the station was dependent upon CHLT for technical help, for salespersonnel, and for management. On the programme side, the station was dependent upon the C.B.C. Dominion Network, and after 1962 the C.B.C. national network. As a result of these dependencies and also as a result of the lack of attention paid to CKTS by La Tribune/CHLT management, the station failed to develop an identity and to develop a distinctive market for its advertising time. Additionally changing radio listening habits and the growth of television had strong effects on the station. CKTS was, however, useful to the owners of CHLT Radio and later C1LT-TV because it prevented other competition from entering the Sherbrooke market. 332

In the mid-1960's, the station's poor performance, and the threat of new competition resulted in a number of changes being made. CKTS hired its own salesforce; it disposed of the unprofitable weekly paper it had been publishing; and it began to develop its own market. On the programme side a "middle of the road" mixed music format emerged with a slight emphasis on country music. C.B.C. programming was deemphasized where possible. This new strategic pattern did result in a growing audience, but still CKTS had difficulty in generating advertising revenues. After a lengthy strike in 1974-1975 resulting in a costly settlement, Télémedia which had purchased the entire CHLT group of stations in 1970 decided to make a global change in strategy. CKTS went after a francophone audience and market with a rock-and-roll format. The results of this change were dramatic as the station's listening audience increased markedly. By the end of 1976, CKTS Radio was competitive force in the Sherbrooke radio market. 11.2 Environmental Change It is evident that the environment each of the four organizations faced in 1976 was markedly different from what each organization faced in 1946. When viewed from the perspective of the entire thirty year period, the position of the English community, and that of English-language institutions, was greatly altered between 1946 and 1976. The English-language community of the Eastern Townships certainly 333 became less significant in the area and emerged as a clearly minority-language community during this period. While in absolute numbers English-speaking citizens had been in a minority in the area even in 1946, the social changes of the Quiet Revolution with the growing assertion of French-language majority for a new social order, and the lack of growth of the English speaking population, both contributed to this change in outlook. From a comfortable, optimistic position in 1946, these four anglophone institutions became defensive, and decidedly more pessimistic about their future as anglophone institutions by 1976. It should be emphasized that the changed environmental position of' anglophone institutions, particularly for non- profit organizations, was not the result of discrimination because these institutions were anglophone--there was little evidence of this. Rather it was the result of changes which made these organizations compete, on an equal basis, for resources in a mariner no different from other Quebec organizations, and was also the result of the realization that the low growth rate of the English-speaking population would make this increasingly difficult. Yet, although this research clearly shows the decline in the position of these organizations as anglophone oriented institutions, the process by which this transition took place was not easy to identify, or to describe, at the organizational level. A number of reasons account for this lack 3314- of clarity. One is that the events of the Quiet Revolution intermingled with other industry specific, or organizational specific, changes to affect a given organization. No 'natter which environmental change was isolated for analysis, it was only part of what was going on at an organization at any particular point in time. Another reason for this lack of clarity in identifying the transitions in the environments of these anglophone organizations is the fact that almost ail of the environmental changes found stemming from either the Quiet Revolution, or other events and trends, developed gradually having impact on these organizations in stages over a relatively long period of time. While sometimes environmental changes had abrupt effects and ail of a sudden created constraints for an organization, this was not the usual pattern. No one event can be said to have completely transformed the environments of these organizations. At best, it might be concluded that, at least for three of these organizations (net CKTS), the realization that the rules of the game had changed for anglophone institutions took place between 1967 and 1971. A third reason for this lack of clarity is that for the profit-oriented organizations the effects of the Quiet Revol- ution were mostly indirect not direct. The Quiet Revolution reinforced the decline of the English-speaking population, and affected the motivation of owners to invest funds in organizations solely dependent on an English market. The fact 33_5 that the forces of the Quiet Revolution had both positive and negative effects for the two non-profit organizations meant that for these institutions the transition process was also not particularly clear, even though the changes of the 1960's were more directly felt. While it was difficult to clearly identify the transition of the environments these organizations faced, other aspects of environmental change could be identified and described. Most of the major environmental changes found in this research could be classified as being of the problem type, presenting situations with which the organization eventually had to deal. Sometimes the broad direction of environmental change would be relatively certain, and sometimes even the specific consequences for a given organization would be predictable. Atother times, the general direction of change would be uncertain, but more frequently the greatest uncertainty involved the exact effects of an environmental change at the level of an individual organization. The most common way major environmental changes affected these four organizations was to alter their revenue bases; a second effect in importance was the restriction of certain strategic actions because of direct regulation, imposition of an authorization routine, or through required changes in an organization's decision making structures. For the environmental changes which had impact on these four organizations, the development of environmental changes 336 from the second order to the first order environment followed a three stage process. The three stages were (1) formation, (2) direction , and (3) impact. Significant in this research was the second stage which could be best described as a stage where society at large, or particular segments of society, determine how various social, technological and scientific trends and developments will be dealt with, particularly in ternis of their general direction. The fact that this stage essentially entails political processes, and activities, perhaps accounts for the large amount of uncertainty which environmental changes entail. For organizations this means that they do not know how they will be affected until, not only the general approach ta environmental changes is determined, but also the exact details of how society will implement its decision are determined. Organizations seem to find it difficult ta allocate resources to cape with environmental changes unless they are certain that these changes will, indeed, have negative consequences for their operations. On the whole, a tendency to wait and see what the specific effects of environmental changes will be seems ta exist. 11.3 Constraints On Strategic Adaptation A major interest of this research was an examination of how the four organizations studied were constrained in adapting ta the environmental changes they faced. The first point that must be stressed in this regard is that these organizat- 337 ions did, in fact, make major changes in their decision streams. The constraints found in the course of this research were mainly constraints in the sense of limiting the speed of organizational response; they were not constraints in the total sense of prohibiting certain actions, or decisions. Indeed it is very difficult to discuss constraints of this second, more restrictive, category because many of the constraints which were identified at some point, as being in that category (for instance government regulations which seemed so iron clad and intractible),ended up being diminished, or effectively removed in later years. As a group, the overall adjustments, or changes that took place in these organizations to better adapt themselyes to their environments could be described as a combination of rationalization, or retrenchment of certain of their stra-- tegies, usually with respect to their English-speaking clientele; and the development of growth strategies in new markets, or services, which were mainly aimed at the broader francophone market. For example, Bishop's University after 1971 realigned its existing programmes, reduced its faculty by 25 percent, initiated recruiting activities, and added continuing education activities. The Sherbrooke Hospital by 1976 had rationalized many of its services, and had a very significant number of francophone doctors and patients. CKTS of course, completely reoriented its activites towards the francophone youth market. The Sherbrooke Record unable to 338 attract a French-speaking market underwent a severe retrenchment in 1969, and by 1976 was once again involved in commercial printing. Internai constraints were important in limiting strategic change processes in these organizations. Overall, the cultural nature of the four organizations, and their importance to the English community was an obstacle to their adaptation to environmental changes. Surprisingly, this was just as true for the profit-oriented organizations including CKTS which was controlled by francophones. Provided the cash flow was flot extremely negative, and provided that CKTS and the Sherbrooke Record offered some other benefits for their owners (in the form of tax effects, or deterrents to competition for other organizational interests), the actions of the owners of both organizations do reveal a certain sense of responsibility to the English-community at least until 1970. This was less true of Conrad Black and his associates, and Télémedia management, in the 1970's. A source of major constraints on strategic change in the four organizations was their past actions and strategies. Particularly, if their past strategies had been successful, there appeared to be a strong attachment to existing products and services, markets, and operating routines. While the embodiment of institutional purpose was beneficial, their can also be no doubt that once achieved through particular strategies, this identity or purpose hindered strategic change. 339

Members of an organization resisted change when that change threatened their power, or the security of their position, both of which were obtained within the context of the past strategy. The actions of some of the faculty of Bishop's University in the 1970's nicely illustrates this problem. Even after management, or key decision makers, decided to change an organization's strategy, a second problem also involving the exit from past strategies remained: How could the changed strategy be implemented without reducing the support of the traditional clients and benefactors of the organization? To abandon one domain before another had been successfully entered involved substantial uncertainty. Cer- tainly, in this research, this problem slowed down the strategic adaptation of anglophone organizations in the Eastern Townships as they attempted to enter new markets while retaining their anglophone identities. The management of strategic exit appeared to be extremely critical for at least three of the four organizations studied. The way exit takes places from an existing strategy has strong effects on the ease with which an organization can establish a new strategic pattern. The case cari be made that this process was perhaps as important as the development of new strategies for the four organizations. Environmental opportunities did exist for each of these organizations. These opportunities arose because of a number of factors. One was the shortage of university and hospital 340 facilities in general: Bishop's University and the Sherbrooke Hospital picked up some of the unsatisfied demand that could not be handled by francophone institutions. Another was the attractiveness of English institutions to a certain portion of the French-speaking population: ethnicity, in a strong sense, became a product of both CKTS and Bishop's University. Other opportunities arose because of developments and trends in each of the sectors where these organizations were involved. No matter what the source of these opportunities, they were only useful if those controlling these four organizations were willing to act. In this regard, as might be expected, the two profit-oriented organizations had an advantage because they were less burdened by complex, decision màking structures. Nevertheless, the lack of attention of an owner, or the values of an owner, could reduce the importance of this advantage. On two occasions new management was required before an environmental opportunity could be fully exploited. The external constraints on strategic adaptation of these four organizations were of two major types: competition and government regulations. This was true for both profit- oriented and non-profit organizations, in fact, no real difference could be found in the strength of external constraints between the two groups. This suggests that often the external constraints on the strategic adaptation of non-profit organizations are often overemphasized in the strategy literature. Although it is true that non-profit organizations do 341

not usually possess the theoretical freedom to convert their organizations to be used for other purposes, and theoretically profit-oriented possess this freedom, in actual fact, Bishop's University and the Sherbrooke Hospital were no more constrained in the availability of feasible alternatives to expand their markets, or services than were CKTS, or the Sherbrooke Record. Given the will to act, the external constraints on Bishop's University and the Sherbrooke Hospital were not, appreciably, more significant.

11.3 Implications Of This Research For The Concept Of Organ- izational Strategy 11.3.1 Population Ecology Versus Managerial Choice Supporters of the ecological/or natural selection model of organizational change might view the findings of this research as proof that, in fact, managerial action was insignificant in bringing about change in these four organizations --the role of environmental pressures being much more significant. A question that has been asked by advocates of the population ecology, or natural selection, model is whether organizations cari really control their environments to any degree, or are they restricted to making minor adjustments of little consequence at the margin of environmental change (Aldrich, 1979). There cari be no doubt that the cases of the four anglophone organizations studied in this research do support the position that environmental changes, particularly shifts in resources, were extremely significant factors contributing to 34.2 the changes that took place in these organizations. Never- theless, the decision streams of each of these organizations also clearly shows the critical role of managerial action in organizational adaptation to environmental change. The fact that strategies could be identified, and that they changed, usually with positive results, supports the notion of strategic choice. Emergent strategies were found in this research, but they were found in only two of the nine instances of strategic change that could be studied. Complete validation of the ecological, or natural selection, perspective would have required a much higher frequency of emergent strategy. Although it might be argued that the strategic changes made by the managements of the four anglophone institutions did operate to a large degree at the margin of environmental change, the changes made were not of little consequence . It is on this issue that the ecological perspective seems to miss the rather large impact managerial discretion can have on organizational events. A great deal of strategic discretion exists with respect to the speed of organization adaptation, and with respect to the direction that adaptation will follow. If anything, the external constraints on strategic adaptation found in this research were extremely broad, allowing a great deal of room for organizational maneuver. In the final analysis, each of the organizations studied had a certain amount of freedom to decide to what degree environ- 343 mental changes would be ignored, with the organization suffering the pursuant consequences in terms of its performance. 11.3.2 The Dual Nature Of Strategic Choice Traditional strategic management literature describes strategic choice as the freedom, or discretion, available fo an organization to alter its major decision streams with respect to its product/market domain, and with respect to how it will compete in that domain. An analysis of the findings of this study shows that there are really two dimensions to the constraints on strategic choice in any organization. These two dimensions are; 1) volition - the will, or desire, of an organization and its management to change important decision streams, and 2) ability - whether an organization has the resources to support a new strategic pattern given the technological,competitive, and other requirements for a given level of performance with this new strategy. Usually strategic management research, if it does deal with constraints on strategic choice at all, concentrates on the ability of an organization to change its products or markets. SiEnificantly, the findings of this research show that in each of the four organizations studied, the will, or desire, of the organization to change strategy was, at least, of equal importance in limiting strategic choice. 11.4 Implication Of This Research For Other Organizations This research has established how four organizations facing important environmental changes were, or were not, able to respond to these changes. In concluding, it is 344

appropriate then to stress a number of points which might permit organizations faced with similar environmental situations to better adapt to their environments: 1) Major environmental changes cannot be ignored for very long without serious deterioration of an organization's revenue base; a late response to environmental change is often costly because environmental opportunities can be missed while an organization delays its response. 2) The management of strategic exit is much more important than has been previously suggested, particularly for organizations that have been successful in establishing an institutional identity. Strategic managers must take a "hands on" approach in guiding the process by which an old strategic pattern is abandoned. 3) The "will" to change strategy cannot be assumed to exist in an organization. This constraint on strategic adaptation must be assessed, and perhaps actions taken to incorporate subunit goals, and the organizational reward system, in implementing a new strategy. 4) Explicit statements of strategic attention may be harmful if a strategic change is controversial, or likely to cause traditional clients, or supporters, to reject the organization. Muddled intention cari be a useful tactic, especially where management wishes to test a possible strategic change without making full commitment to it, or where management is uncertain of the will of critical organizational members to change to a new strategy. 5) There is growing evidence that global changes in strategy may require a completely new management team. 11.5 Conclusion This research will not conclude with the traditional call for more research on the subject which has just been investigated. is obvious that the major purpose of this research was to generate broad hypotheses about organizational 345 strategy that would provide stimuli for future research. Rather this study ends with a confirmation of the role of managerial action in bringing about organizational change. This detailed examination of Bishop's University, the Sher- brooke Hospital, the Sherbrooke Record, and CKTS Radio over a thirty year period has underscored the fact that often it is not external constraints which restrict organizational adaptation to environmental changes--it is the absence of the will to change which is the constraining factor. It is we alone who have devised cause, sequence, for-each-other, relativity, constraint, number law, freedom, motive, and purpose; and when we project and mix this symbol world into things as if it existed in itself, we act once more as we have always acted - mythologically. The "unfree will" is mythology; in real life it is only a matter of strong and weak wills. (Friedrich Nietzsche, Beyond Good and Evil, p.28)