beyond the metaphor:the morphology of organizational

Beyond the metaphor:The morphologyof organizational decline and turnaroundJuha-Antti Lamberg and Kalle Pajunen

A B S T R AC T This study is based on the thesis that Vladimir Propp’s (1928/2001)

theory of folktale structure functions not only as a morphology of

folktales, but also as a structural, deep-level model of any process

that includes crisis and recovery.We essentially suggest that corpor-

ate decline and turnaround processes can be emplotted into a

folktale-like structure that supports Propp’s theory and thereby helps

uncover deep-level mechanisms governing the process. The

developed model describes seven mechanisms that drive the

organization from initial strategic harmony to disharmony, and

furthermore to the construction of a new strategic harmony, thus

creating a perspective for the interpretation of long-term organiz-

ational decline and turnaround processes. Theoretical and practical

implications are offered.

K E Y WO R D S folktale � history � morphology � organizational decline �

psychodynamics � turnaround

Corporate declines (e.g. Cameron et al., 1987; McKinley, 1993; Mentzer &Near, 1992; Whetten, 1980) and turnarounds (e.g. Barker & Duhaime, 1997;Barker & Mone, 1994; D’Aveni, 1989; D’Aveni & MacMillan, 1990;Grinyer & McKiernan, 1990; Hambrick & Schecter, 1983; Robbins &Pearce, 1992) have motivated an accumulating body of research in recentdecades. The reason for the scholarly interest seems to be obvious, asorganizational decline is certainly one of the most dramatic and stressing

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Human Relations

DOI: 10.1177/0018726705058499

Volume 58(8): 947–980

Copyright © 2005

The Tavistock Institute ®

SAGE Publications

London,Thousand Oaks CA,

New Delhi

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01_058499_Lamberg (JB-D) 22/9/05 8:34 am Page 947

periods an organization may face. Most of the research has, however, focusedon defining the static antecedents of turnarounds or the easily observabledevelopment stages during the processes. Our fundamental thesis is that theeasily observable may not be enough to understand decline and turnaround(Godfrey & Hill, 1995). We may also need to reveal the deeper structure thatgives rise to the observable events (Ginzburg, 1989). The challenge for thisassumption is that we have no direct access to this underlying structure.Therefore, we need to find ways to move from the surface structure to thedeep structure in order to ‘recover a single [. . .] account from multiple,partial, subjective, and even conflicting accounts’ (Pentland, 1999: 712).

We approach this issue from the basis that decline and turnaroundprocesses can be seen as sub-phenomena of group behavior in existence-threatening crisis situations. The argument is that similar underlyingmechanisms seem to affect group behavior in threatening situations (e.g.Hirsch, 1986; Moxnes, 1998) whether in business or some other context. Inthis article, the central point is that folktales may provide a rich source ofknowledge on how organizations proceed during crisis and survival, giventhat their deeper function is to intentionally distribute crucial informationon how to manage situations that threaten the existence of a group ororganization (Bettelheim, 1976; Propp, 1985). In the same spirit, Gabriel(1991a) has shown that organizational lore reflects symbolic reconstructionsof the organization’s history, thus making more transparent what individualsare unable to express in straight talk.

Therefore, we suggest that Vladimir Propp’s (1928/2000) theory of thefolktale structure may function not only as a morphology of folktales, butalso as a structural model of any process that includes crisis and recovery.Specifically, we claim that a corporate decline and turnaround process canbe emplotted into a folktale-like structure that supports Propp’s theoryand thereby gives the possibility to uncover, or make intelligible, the deepstructure of the process that produces the perceptible events.

In organization studies, folktales have been approached from either apost-structuralist perspective that is primarily interested in the purely textualelement in tales (for an overview see Czarniawska, 2000) or, alternatively, apsychoanalytic and metaphysical stance which sees that folktales ‘captureunconscious processes . . . not directly observable’ (Smith & Simmons, 1983:390). In the latter perspective, folktales have been utilized to discover themesthat ‘go beyond surface meaning’ (Schneider & Dunbar, 1992), and to uncovershared meanings and myths in texts (Fiol, 1989; Moxnes, 1999). We essentiallyfollow this latter stream of thought. Our approach, however, complementsearlier psychoanalytic and metaphysical uses of folktales as we concentrateon the specific process of decline and turnaround. This also explains why we

Human Relations 58(8)9 4 8


rely on Propp’s processual theory, a synthetic system of classification derivedfrom the structure of the quest type of folktales, which are characterized bytheir optimistic ending. In particular, we associate the narrative structure ofthe turnaround process with Propp’s ideal type of folktales.

When building these ideas our argument is based on three premises.First, we believe that the psychoanalytic literature (Bettelheim, 1976;Gabriel, 1991b; Hirch, 1986; Moxnes, 1998; von Franz, 1970/1996)correctly suggests that folktales carry information on the deep-level mech-anisms in groups and families. These mechanisms are usually unconsciousand possibly impossible to make transparent, but they exist and influence thelives of individuals, families and groups (Diamond & Alcorn, 2003). Second,because the function of the folktales is to offer a structure and meaning forcrisis situations, we believe that Propp’s model obtains information on howsimple organizations such as groups and families are related to the processesof crisis and survival. Propp does not argue that folktales are reflections ofunconscious processes per se, but offers the typical narrative structuresof these processes. The third premise is that the narrative structure andmechanisms of quest-type folktales and that of decline and turnaroundsclosely correspond; they seemingly obtain a similar sequence of eventsstarting from prosperity and resulting in new prosperity via crisis.

The article is divided into six sections. After the introduction, webriefly review previous research on organizational decline and turnaroundprocesses and specify the research gap in the context of managementresearch. The third section describes our conceptual framework. The fourthincludes an outline of the research site, the methodology used, and the datacollection process. The fifth section contains the results of morphologicalanalysis of the organizational decline and turnaround process of the Finnishpaper and pulp industry company Enso-Gutzeit, and the theoretical modelderived from the analysis. The final section discusses the theoretical, research,and practical implications.

Earlier decline and turnaround research

Following existing conceptualizations, by organizational decline we refer todeterioration in an organization’s adaptation to its microniche and theassociated reduction in resources within the organization (Cameron et al.,1987, 1988; McKinley, 1993; Mentzer & Near, 1992; Whetten, 1980). Byturnaround, we mean the recovery of a firm’s economic performance follow-ing an existence-threatening decline (Arogyaswamy et al., 1995; Barker &Duhaime, 1997; Hofer, 1980; Pearce & Robbins, 1993).

Lamberg & Pajunen Beyond the metaphor 9 4 9


Since the severe economic downturns in the 1970s, organizationaldecline and turnarounds have received accumulating attention in variousresearch fields and disciplines, including psychology, finance, organizationbehavior, strategy and organization theory (McKiernan, 2003). In the litera-ture on strategy and organization theory, organizational declines and turn-arounds have become an established research theme, especially sinceChandler’s (1962) classic study. A central question in the research has beenthe examination of why and how some organizations are able, and othersare not, to begin a turnaround in a crisis situation and make it succeed(Barker & Mone, 1994; D’Aveni, 1989; D’Aveni & MacMillan, 1990;Grinyer & McKiernan, 1990; Hambrick & Schecter, 1983; Robbins &Pearce, 1992). Specifically, since the early studies of the mid-1970s and early1980s (Bibeault, 1982; Hedberg et al., 1976; Hofer, 1980; Schendel &Patton, 1976; Schendel et al., 1976), researchers have concentrated onexamining different turnaround strategies (Arogyaswamy et al., 1995; Barker& Duhaime, 1997; Hambrick & Schecter, 1983; Hofer, 1980; Hoffman,1989; Robbins & Pearce, 1992), causes of decline (D’Aveni, 1989; Hambrick& D’Aveni, 1988; Miller, 1994; Mone et al., 1998), or the characteristics ofturnaround managers and the compositions of boards (Barker et al., 2001;Daily & Dalton, 1994, 1998; Goodstein & Boeker, 1991).

Following the first seminal and synthesizing studies to analyze declines(Cameron et al., 1987; Weitzel & Jonsson, 1989; Whetten, 1980),researchers have also studied structural changes during and after decline(Barker & Mone, 1998; Mentzer & Near, 1992; McKinley, 1987),antecedents (Cahill, 1998; Schick & Ponemon, 1993), and the outcomes ofdecline (Mone et al., 1998; Wiseman & Bromiley, 1996). In more semioticand post-modernistic literature, the complexity of crisis situations has beeninterpreted using the conceptual lenses of symbolism (Armenakis et al., 1995)and storytelling (Harfield & Hamilton, 1997). By contrast, neo-institutionalresearch (DiMaggio & Powell, 1983; Meyer & Rowan, 1977; Scott, 1995)and organization ecologists (Barnett et al., 1994; Hannan & Freeman, 1984),for example, do not believe in the possibility of managed change if theenvironment is rapidly changing (see also Amburgey et al., 1993).

Despite these contributions, the explicit use of processual theories andhistorical analysis has been scanty, excluding some recent suggestions(McKinley, 1993; Pandit, 2000; Shook, 1998). The idea of the sequentialstructure of the processes, however, has crept into research in the form ofstage models. Robbins and Pearce (1992; Pearce & Robbins, 1993), forexample, have divided the turnaround process into two stages: retrenchmentand recovery. Bibeault (1982) concludes that turnarounds include five stages:management change, evaluation, emergency, stabilization, and return to



normal growth. Thus, these stage models concentrate on the period ofexplicit implementation of turnarounds and, in fact, analyze the contents ofturnarounds more than the processes (Hoffman, 1989). Balgobin and Pandit(2001) similarly propose that a successful turnaround consists of five stages,but also include the stages of decline and crisis, as well as the triggers forchange that precede the implementation stages. The explicit implementationstage is thus only one part of the turnaround process, and is not possiblewithout several successful stages before it (Audia et al., 2000; Stopford &Baden-Fuller, 1990). A similar proposition is given in McKiernan’s (2003)comprehensive turnaround model, which includes six stages: causes, triggers,diagnosis, retrenchment, recovery, and renewal.

To summarize the current situation in turnaround research, it seemsthat, at least implicitly, some processual viewpoints already exist in the litera-ture. Altogether, there is a need for further conceptualization and for adescription of the deep-level mechanisms driving the decline and turnaroundprocesses, as well as for the creation of interpretative tools to understandthese processes (Poole et al., 2000). Our aim in this article is to address eachof these research gaps while recognizing the limitations of our own approach.

The morphological model

Propp’s influence on structural analysis is elemental in literature research.Most often, his theoretical framework is referred to as a building block informalist approaches (Dundes, 1997; Schleifer & Velie, 1987). Of these,Greimas’ (1971) actant model, in particular, has been widely employed inthe organization and management literature (further discussion in Boje,2001; see also Gahmberg, 1983). Because of the suggested strong underlyingstructural similarities between quest-type folktales and organizationaldecline and turnarounds, we use Propp’s framework instead of the moregeneric post-structural and post-modern ones (for an overview see Schleifer& Velie, 1987).

One perspective on the meaning of folktales is to see them as havingtheir roots in an oral tradition derived from the experiences and fantasies ofprimitive peoples who lived thousands of years ago (Ziolkowski, 1992). Theso-called ‘Finnish school’ of folktale research assumes (Krohn, 1971) that bydiscovering complete life histories of folktales and studying the manyvariants of an oral tale, it is possible to find an Urmärchen that has passedinto other versions (Ziolkowski, 1992). Moreover, researchers have foundthat similar folktales have been told in various cultural contexts and histori-cal circumstances. Versions of the popular ‘Little Red Riding Hood’ were



told, and even published, as early as 1024 (Ziolkowski, 1992) but, forinstance, Bettelheim (1976) assumes that myth-related tales may originatefrom far earlier periods of human existence. Similarly, Gabriel (1991a) seescorporate myths as surrounded by the various versions of stories and corpor-ate lore.

Vladimir Propp’s contribution to folktale research was to construct the‘ideal type’ of the quest type of folktales instead of trying to directly trackthe Urmärchen behind them. Propp’s (1928/2000: 21) basic proposition isthat ‘all [quest type of] folktales, by their structure, belong to one and thesame type’. He suggested that a quest-type tale is a process proceeding fromvillainy or the lack of something through intermediary functions to marriageor other functions signifying the end of the development. More specifically,Propp deconstructed folktales into small narrative units that he callsnarratemes. On this basis, he constructed a taxonomy of folktales thatincludes 31 generic functions (Appendix 1).

These 31 functions are the basic element in Propp’s framework. Propp(1928/2000) emphasizes that all of the functions never exist in all tales. Theabsence of functions in particular folktales indicates that they are incompletevis-à-vis the hypothetical ideal type of tales and that all tales are in one wayor another partial. Consequently, the number of functions can vary between2 and 31. The only imperatives are that every process involves a beginning(i.e. prosperity) and an optimistic ending (new prosperity), and that thesequence of the functions’ emergence is the same. Although the sequence ofthe emergence of the functions is strict, many functions may occur simul-taneously. In fact, Propp offers six alternatives for how functions may takeplace inside a tale. The only firm rule is that every sub-process (‘move’) hasto include a beginning and ending. If there is only one sub-process, as in ourcase, the functions emerge in sequential order.

For the analysis of organizational decline and turnaround, Propp’sframework is especially appealing because the subject of morphologicalanalysis is the basic functions, not their performers and not the objectsdependent upon them. This is an important input for processual turn-around research, because earlier research has habitually been fixated withleader-centrism, thus impeding the possibility to understand the deeperelements of the processes. According to Propp’s (1928/2000: 21) originaldefinition:

1. The functions of characters serve as stable, constant elements in a tale,independent of how and by whom they are fulfilled. They constitutethe fundamental components of a tale.

2. The number of functions known to the folktale is limited.



As a result, in a story the names of the dramatis personae change, buttheir actions and functions do not. Thus, the aim is to analyze what thedramatis personae do ‘. . . but the question of who does it and how it is donealready falls within the province of accessory study’ (Propp, 1928/2000: 20).Even though the emphasis in morphological analysis is on the functions ofthe dramatis personae, Propp defined the spheres of action as seven typesthat can be considered the basic personages of a story. These are:

• the sphere of action of the villain;• the sphere of action of the donor;• the sphere of action of the helper;• the sphere of action of the princess;• the sphere of action of the dispatcher;• the sphere of action of the hero; and• the sphere of action of the false hero.

According to Propp, there are three possibilities for how these spheresare distributed: First, the sphere of action directly corresponds with the char-acter; second, one character is involved in several spheres of action; andthird, a single sphere of action is distributed among several characters. Theimplication for our analysis is that the number of functions in a turnaroundis limited to a small number, but the number of personages is much greater.Therefore, one person can be linked to several, even contradictory, functionsand/or several persons can be linked to the same dramatis persona in differ-ent contexts. For example, the hero can be constituted by several personsduring different phases of the process, or a personage in the turnaround canact, for example, both as a donor and villain. Again, this highlights theversatile nature of Propp’s framework.

Method

Case illustration

The research object of this study is Enso-Gutzeit, a Finnish paper and pulpcompany that was founded in the 1870s. In 1918, the Finnish State acquiredit and in 1998 it merged with Swedish Stora. At the beginning of the21st century, Stora-Enso was the second-largest paper and paperboardproducer after International Paper (Paperloop, 2001). The rationale forchoosing Enso as a case study object is its turnaround process during the1970s, which was completed in 1981–1986 through severe divestments andstrategic reorientation.



The period of organizational decline started at the beginning of the1960s, when Enso’s long-time CEO, Mr ‘White,’ retired. Over the next 20years, Enso faced several problems as regards profitability and organizationalperformance. The crisis culminated in the late 1970s, when the dysfunctionof the firm was publicly recognized after several unprofitable years andduring difficult political argumentation concerning the firm’s future strategicdirection.

Enso had been heavily unprofitable since the end of the 1960s, but thelosses were covered up in the published figures until the beginning of the1980s. It is noteworthy, however, that Enso constantly showed a worseperformance than its competitors during the 1970s. It is illustrative that thereturn on investments in Enso was already negative in the late 1960s. All inall, the financial performance indicates that Enso can be analyzed as a classicturnaround case, exhibiting most of the symptoms of a firm in crisis(McKiernan, 2003). Figure 1 illustrates how Enso’s profit performance wasconstantly below the Finnish industry average during the period 1970 to the1980s.

In addition to the poor financial performance, the crisis period wascharacterized by multiple problems in decision-making and organizationalperformance. During White’s reign, Enso invested heavily in the packagingbusiness as well as in shipping, which set the company on a path of unrelated


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Figure 1 Net result of Enso-Gutzeit, Kymi, Yhtyneet Paperitehtaat and Metsäliitto (on average)1974–1990, millions of 1995 FIM.Annual reports 1970–1990


diversification for almost three decades. White’s entrepreneurial, almostdespotic, management style (Ahvenainen, 1992) was followed by severalattempts to modernize the firm’s organization structure and strategicplanning procedures. In this, White’s followers employed, for example,McKinsey’s consultants, who helped Enso to adopt the M-form organiz-ational structure and formal strategic planning processes. At the same time,the company politicized both internally and externally. On the board ofmanagers, CEO Blue (1963–1972) was opposed by the divisional leaders forhis internationalization and investment policies.

The Finnish political climate, which had strong socialist characteristics,also influenced Enso’s performance (Lilja et al., 1992; Pohjola, 1996). TheFinnish government, for example, required that Enso be not only profitable,but also a good employer (Ahvenainen, 1992). Furthermore, Enso as thebiggest Finnish company at that time attracted leading politicians, includingFinland’s long-time president, Urho Kekkonen, and his high-profilesupporter, diplomat Green, who tried to use the company for his personalpolitical aspirations.

At the beginning of the 1970s, Enso’s problems culminated whenGreen, as the CEO of Valmet, another state-owned company, was nominatedChairman of the Board of both firms by intrigue. This happened with thehelp of President Kekkonen, who in essence forced Enso’s internal andexternal boards to accept Green’s nomination. It has been argued thatGreen’s intention was to use the chairmanships to smooth his path to thepresidency after Kekkonen, and that he tried to hide the crisis at Enso for aslong as possible (Ahvenainen, 1992; Kylmälä, 1986; Sainio, 1982). In anycase, Green as a full-blooded politician was seemingly unable to control thesituation in Enso. In the Finnish literature and the economic press, Green hasbeen labeled the principal villain and the main cause of Enso’s problems. Incontrast, the CEO of Enso from 1974 to 1992, Mr Black has been seen as aclassic, heroic turnaround leader who was able to save the company follow-ing Green’s reign (Ahvenainen, 1992).

Recently, however, it has been pointed out that fundamentally Enso’sproblems originated during White’s period in power when Enso was, on theone hand, focusing on producing brown paper and other bulk products; andon the other hand, was diversifying more and more into the shippingbusiness. These dual paths led to a strategic trap in the 1970s when bulkproducts lost their ability to accumulate profits and when shipping requiredhuge investment and produced only marginal profit. At the same time, Ensomade large investments in Canada and the USA, which raised its debt burdento a critical level.

During the crisis period (1962–1981) almost one-fifth of sales came


01_058499_Lamberg (JB-D) 22/9/05 8:34 am 55

from shipping. At the same time, Enso was vertically integrated, producingits own electricity as well as owning considerable expanses of forest. Theturnaround was made possible by Enso’s divesting itself of all these unrelatedassets and by raising the level of processing in paper production.

Data collection and analysis

As Boje (1991) noted, organizations are storytelling systems in which indi-viduals attempt to make sense of their past and present by performing stories.In the same spirit, Czarniawska (1999) and Gabriel (1991a) have empha-sized the important role of corporate lore as carrying information of culture,myths and the voices of the marginalized actors. When it comes to thepractice of collecting such data, i.e. stories and lore, narrative researchershave increasingly emphasized unofficial statements and stories over theofficial material and ‘corporate fantasies’ (Czarniawska, 1999; Gabriel,1991a).

Our approach deviates from these methodological choices in oneparticular way: we had to create our own detailed account of one specificprocess to gain insight to the more general phenomena. What we did, inpractice, resembles in a shallow way how Boje (2001) divided antenarrativesfrom stories and narratives. In the Bojean sprit, the antenarrative refers to afragmented state of affairs before framing and interpretation, which createthe narrative structure. For us, the antenarrative-like information exists inthe pieces of historical evidence or clues (Ginzburg, 1989) that becomehistory (i.e. narrative) through our own interpretative work.

A problem vis-à-vis the poststructuralist tradition in organizationtheory is that we also follow structuralist (Pentland, 1999; Propp,1928/2001) and psychoanalytic (Bettelheim, 1976; Moxnes, 1999; vonFranz, 1970/1996) literature that interprets tales as something between textsand the original Urmärchen; i.e. past reality. However, as Czarniawska(2000: 31) has stated, ‘. . . rather than striving for a rigorous narrativeanalysis or for purity of a genre, reading and writing of narratives will remaina creative activity, based on bisociations and hybridizing.’ Thus, we simul-taneously believe that: (i) history exists through the interpretation andnarration of the researcher or writer, but (ii) there may be a deep structureor reality that can be reached via this exercise.

In our case, historical analysis means, in essence, an attempt to revealthe underlying structures of the process. Therefore, the ‘reality’ of the resultsof historical analysis is bound by the events of history as it is made compre-hensible on its own terms by historical research. Next, we describe how wehave tried to accomplish this. In essence, we follow here Collingwood (1956)



and Ginzburg (1989), who suggest that the interpretation of historical eventsrequires a rigorous collecting of pieces of evidence. In the spirit of Ginzburg(1989: 123), we see that ‘though reality may seem to be opaque, there areprivileged zones – signs, clues – which allow us to penetrate it.’

Our research proceeded in three phases: data collection, writing thehistory of Enso-Gutzeit from 1945 to 1990, and, finally, conducting thehistorical interpretation, relying on Propp’s framework to create the narra-tive structure of the particular decline and turnaround process. We begancollecting research material during the summer of 2000, and spent severalweeks at the Enso-Gutzeit archives over the next two years (Appendix 2).The first problem was to find a balance between the published records of theprocess and our own research work. We decided first to outline the processby using different published sources, including the official company history(Ahvenainen, 1992) and the personal memoirs of the two key figures in thedecline and turnaround, namely Black (Kylmälä, 1986) and Green (Sainio,1982). We made this decision primarily because of the enormous number ofdocuments and the huge amount of other material in the Enso archive in theCentral Archives for Finnish Business Records. Enso’s archive is a rich collec-tion of material ranging from the minutes of board meetings to consultants’reports and confidential correspondence, but at the same time it is frag-mented into numerous sub-archives and private collections. By sketching arough outline of the main events in the process, we were able to manage theresearch process at the archive.

During the data collection process, we read and analyzed a variety ofcorporate documents, each describing segments of the process from somespecific angle. Some documents, such as SIAR’s 1977 consultant report,received more attention, whereas others primarily helped to contextualize thedecline and turnaround process itself. During the data collection phase, wetranscribed document segments into an Excel database. At the end of thecollection phase, the database was sorted into chronological order anddocument segments were synthesized into 98 events. These events, togetherwith nearly 200 pages of handwritten notes, constituted the base for thehistory-writing phase. Moreover, in another project, we collected quantita-tive material describing the economic performance of all the major Nordicpaper and pulp industry companies, which further helped us to describe andinterpret Enso’s developments vis-à-vis its competitors.

The particular problem in writing the history of Enso’s decline andturnaround process was the many versions and stories that had already beenpublished as interviews or memoirs, or that had been circulated inside Ensoas oral folktales. During the data collection phase, we studied the majorityof the published materials, including books and various magazines, for



example, Talouselämä, the leading business magazine in Finland, as well aspopular magazines such as Hymy and Seura. The decline and turnaroundprocess, with all its politicking, hassling, and arguing, was a traumaticexperience for the persons involved and, consequently, the existing narrativesall had strong personal points of view. Even the official history of Ensodescribes the ‘official’ story of the process as having been interpreted by theturnaround leaders and their successors. Our point of view in writing thehistory was that of an outsider, which meant a rather complete triangulation(Denzin, 1978), relying on analysis and quantitative evidence and requiringthe maintenance of our neutrality in terms of the antecedents and outcomesof the process.

The written manuscript (i.e. the history), and our shared understand-ing of the process guided us directly to the last phase of the inquiry, that is,the historical interpretation. During the data collection phase, and even morestrongly while writing our own version of Enso-Gutzeit’s decline and turn-around process, we noticed several punctuation points and above-averageencounters that seemed to have some relation with the overall outcomes ofthe process. Thus, for the historical interpretation, the results of which arereported in the next main section, we had an understanding concerning thepossible narrative structure underlying the process. In practice, we comparedour understanding of the process that we derived from the historical evidencewith the Proppian framework and then decided to include in the analysisthose functions that had a transparent match with the written history andthe underlying archival data. This step finally created the narrative structureof the process.

Results

The morphology of decline and turnaround

In the following, Enso’s decline and turnaround process is presented usingthe Proppian framework and definitions. We systematically use Propp’soriginal vocabulary thus treating the underpinning history as a folktale which– as mentioned – operates between reality and text. Every establishedfunction is given a title, defined, and linked to the Enso case with an expla-nation concerning the analogy used. After that, each function is elaboratedin a form that describes a discrete component in the underlying structure ofthe decline and turnaround process.



Initial situation

The initial situation is not a function as such, but a morphological elementthat introduces the context of the story and possibly some of the key person-ages. Most importantly, the initial situation presents the situation of ‘pros-perity serving as a contrasting background for the ensuing misfortune’ (Propp,1928/2000: 25). In Enso’s case, the initial situation of prosperity and a solidlyfunctioning production system occurred at the end of White’s patriarchy.During his reign, Enso had been managed with a light central administration,characterized by direct communication between line managers and the CEO.White was a large-scale investor who dominated strategic visioning, analysis,and decision-making in Enso. Despite his aggressive investment policies, infinancial terms, Enso was a solid performer at the beginning of the 1960s. Atthat time, the majority of the dramatis personae of the decline and turn-around were already linked to the company, with the exception of Mr Yellow(CEO in 1972–1974), who was recruited from outside the company at theend of the decade, and Green, who was attached to Enso at the beginningof the 1970s. This means that most of the top and middle managementparticipated in the whole process of prosperity, decline, and turnaround.

1. Absentation: One of the members of a family absentshimself from home

The first function is the absentation of some family member from the home.According to Propp, the absenting person might be a member of the oldergeneration. In intensified form, one of the parents dies. In our case, White’sretirement in 1962 fulfills this function. According to Enso’s internal analysesin the late 1960s and early 1970s, the retirement created a regenerationproblem in the top management team because White had concentrated bothstrategic and operational management responsibilities in himself. Even thecorporate wisdom, that is, the appropriate way to organize the business, waspersonified in White. In other words, after his retirement, there was nocollective understanding of how the company should be managed; neitherwas there a particular candidate to replace White as the strategic apex of thecompany (Ahvenainen, 1992). Thus, the retirement of White that led to theloss of the coherent corporate wisdom can be seen as the causal force thatinitiated the disintegration of the prevailing strategic harmony and formedthe basis of the organizational decline.

Elaboration 1: The basis of the prevailing strategic harmony disinte-grates, thus initiating organizational decline.



2. Interdiction: An interdiction is addressed to the hero

After the absentation, an interdiction is addressed. In folktales, childrenmight be warned not to go to a forest or not to eat apples from a certaintree. In our case, the interdiction was linked to Enso’s investment policies inthe 1960s. In contrast to the past strategic harmony, the new CEO Blue(1962–1972) decided to invest in shipping and overseas facilities, thusfollowing the general internationalization and diversification fashion of the1960s. According to board meeting material, the board of directors resistedand protested against Blue’s intentions to invest in foreign production facili-ties and raise the debt burden, thus interdicting with regard to the negativeconsequences. However, these objections were not effective enough toprevent the cumulative diffusion of strategic disharmony; in fact, they onlycontributed to the internal disagreement within the organization.

Elaboration 2: Disharmony is observed, but contradictory forcesprevent the required integration.

3. Violation: The interdiction is violated

In this function, a new personage, the villain, enters the story and the inter-diction is explicitly violated. In Enso, CEO Blue started the Kitimati andEurocan projects in North America, decided to further invest in shipping,and started to change the organizational structure, using McKinsey as theprimary advisor. In retrospect, the Eurocan project in Canada can be seen asone of the key reasons for the difficult financial situation in the 1970s.Starting with machinery, the quality of the projects, timetable issues, etc., theEurocan project was catastrophic almost from the beginning, and necessi-tated an accumulating number of extra investments over the years. Whereasthe original estimations of the magnitude of investments varied from 10 to30 million euros (at 2002 values), overall expenses in 1965–1981 exceeded400 million euros. Moreover, at the same time when the internationalizationprocess required both managerial attention and financial resources, domesticpaper mills were neglected. Thus, the violation of the interdiction causedmisfortune to the company. It is noteworthy that it is almost impossible topersonify the villain in Proppian terms. The interdiction was the result ofconservative industry wisdom, that is, the line and division managers recog-nized the risks inherent in fashionable internationalization and diversifica-tion strategies. Overall, the company ‘lost its grip’ during the post-Whiteinterregnum due to weak strategic intent and routines as well as the powervacuum.



Elaboration 3: Open violation of strategic harmony reinforces disinte-gration.

4. Reconnaissance: The villain makes an attempt at areconnaissance

Within this function, reconnaissance means ‘. . . the aim of finding out thelocation of children, or sometimes of precious objects.’ Accordingly, at thisstage, one aspect of the personality of the villain becomes more closely linkedto Green, CEO of Valmet. In 1968, he expressed interest for the first time inbecoming CEO of Enso after Blue’s reign. Green was a former diplomat andCEO of the unsuccessfully functioning company Valmet. He represented ageneral management style and used a wide range of international anddomestic advisors. According to Green’s entire correspondence, his interestin daily business leadership was marginal compared with his symbolic figure-head role in the Finnish, and partly also the international, business and politi-cal elite. In short, in Proppian terms he represented a threat to the survivalof the company, especially in a situation where strategic disharmony wasalready beginning to become institutionalized. This risk was also acknowl-edged in contemporary discussions documented in minutes of the meetingsof the external board and in public debate. At the same time, however, thecollective confusion regarding Enso’s strategic direction and functions can beinterpreted as the underlying ‘villainy,’ which was only reinforced by theappearance of a new executive candidate.

Elaboration 4: The first attempt to institutionalize the disharmony.

5. Delivery: The villain gains information on his victim

During 1968–1973, President Kekkonen intervened in discussions on Green’sposition as well as Enso’s future, and suggested the possibility of makingGreen Chairman of the Board (instead of CEO) at an extraordinary annualmeeting. During these discussions, members of the external board gave in toKekkonen’s demands and thus smoothed Green’s path to power. The nego-tiation process concerning Green’s position can be seen as a corporategovernance problem, because members of the external board were unable toreach an effective balance between the demands of the owner (representedby Kekkonen) and the company. From a folktale perspective, Green was byno means the main trigger of decline, but rather symbolized increasingdisharmony in and around the company.



Elaboration 5: As a result of ongoing disintegration, the lack of consen-sus in an organization contributes to stabilization of the prevailingharmful progression.

6. Trickery: The villain attempts to deceive his victim in orderto take possession of him or his belongings

In this function, the villain assumes a disguise and uses trickery to takepossession of belongings. Green knew that his chairmanship was opposed inEnso and used his position and trustworthiness in Finnish–Soviet trade as ameans of obtaining administrative power in Enso. Other acts of villainy, forexample, certain investments in overseas paper production, were justifiedusing strong managerial rhetoric. The trickery was effective because thecompany was already in a state of disharmony and was thus vulnerable tothe use of rhetoric and other emotional impulses.

Elaboration 6: Emotional impulses strengthen the institutionalizationof the disharmony.

7. Complicity: The victim submits to deception and therebyunwittingly helps his enemy

This function can also be labeled an initial misfortune. After Green wasnominated full-time Chairman of the Board, Enso’s executive level more orless accepted the situation. For example, CEO Yellow tried to co-managewith Green for two years, although Green was unwilling to cooperate withhim and openly sidelined Yellow from crucial decision-making processes(Ahvenainen, 1992). Furthermore, Green’s style of management made itpossible to continue with the sub-goal of pursuing investment policies at thedivision level. A case in point was investments in passenger ships that wereinitiated and prepared by experts in that particular division based onextremely optimistic calculations and expectations. A couple of years laterthe annual losses were equal to the overall investments in these ships. In asense, some company executives exploited the opportunities provided byGreen’s liberal policies. Moreover, Green’s personal advisors establishedthemselves at corporate headquarters, which further complicated decision-making at the highest executive level. Accordingly, the organization startedunconsciously to institutionalize strategic disharmony and organizationaldecline became established.

Elaboration 7: Disharmony becomes institutionalized.



8. Villainy: The villain causes harm or injury to a member ofa family

This function is crucial for the analysis of the tale as well as for our case.According to Propp, the preceding functions of the folktale may be regardedas the preparatory section that makes possible the occurrence of an act ofvillainy or the facilitation of its happening (Propp, 1928/2000). In Enso, theearlier-described causal forces had created an accepted atmosphere forharmful organizational behavior. Thus, the absence of corporate strategy,rather than intentional harming, that characterized Green’s regime receivedinstitutionalized status in the organization. This also provided a fertile basisfor the realization of other harmful events. For example, Green drove Yellowout in two years, which fulfills several sub-functions in Propp’s framework(declaration of war among others). Serious harm was the completing of theformal/centralized strategic planning procedure after Yellow’s exit. Thus, thecompany lacked both personified leadership and formal (functioning)planning and control. At the same time, the role of the headquarters andmiddle management was increasing; this created inertia in decision-makingat all levels. It is characteristic that the number of persons at headquartersincreased tenfold in less than ten years after White resigned. The neworganizational structure led to problems in bottom-to-top information flowand, on the whole, strategic management in Enso was dysfunctional duringthe 1970s (Ahvenainen, 1992). It is illustrative that in comparison with itscompetitors Enso’s strategic behavior with regard to new paper mills oracquisitions was very passive during the 1970s.

Elaboration 8: The harmful effects of the disharmony diffuse to alllevels of the organization.

8a. Lack: One member of a family either lacks something ordesires to have something

During the period of decline and crisis, Enso faced severe financial problems.However, it was able to expand its investments, using state ownership asleverage. Accordingly, before the late 1970s, the company did not lack moneyas such, but rather strategic management on the whole. The managers ofdivisions and factories, for example, felt that ‘they did not know the overalldirection of the company’ (SIAR report) and they did not have the power tointervene in the problematic situation at headquarters (Ahvenainen, 1992).In other words, Enso’s production divisions lacked both strategic manage-ment and the possibility of affecting the strategic direction, even if the



problems were recognized in the company. From the morphological perspec-tive, however, the object that is desired is so important compared with thegeneral feeling that something is lacking.

Elaboration 9: The harmful effects of disharmony reinforce themselves.

9. Mediation: Misfortune or lack is made known; the hero isapproached with a request or command: he is allowed to go orhe is dispatched

In 1973, all divisions of Enso were informed about the severe financial andorganizational situation in the company. In the same circular letter, divisionalmanagers were asked to help the executive board to find solutions to theproblems. Accordingly, the most obvious consequences of the decline wereexplicitly recognized. However, because strategic disharmony had becomeinstitutionalized and had diffused through the organization, members ofthe organization were largely unaware of the generative causes behind thecrisis. During the following years, discussions regarding the causes of thedecline and possible solutions continued inside the company (in strategicplans, for example) and increasingly in public as well. At this stage, theproblems in performance were mainly attributed to external factors such asthe Finnish government’s economic policy and a general downturn in exportmarkets.

Elaboration 10: The consequences of organizational decline, at thelevel of crisis, become concretized in observable indicators andpromote growing criticism.

10. Beginning counteraction: The seeker agrees to or decidesupon counteraction

The beginning of counteraction in Enso was a relatively slow process. It wasconducted by a group of personages rather than by one particular leader(hero). This reflects how difficult it may be to act against a decline when ithas been institutionalized in the structures of an organization. As a firstresponse, CEO Yellow tried to re-orient the company at the beginning of the1970s, using new managerial techniques and more formal planningprocedures. Yellow, for instance, was keen to formalize strategic planningand analysis procedures. It is evident that Yellow was already aware of someof the problems in the company and had ideas how to solve them. FutureCEO (1974–1992) Black’s role became pivotal at the end of the decade when



he started to campaign for a large-scale divestment policy. Finally, the Headof the Bureau of the Ministry of Trade and Commerce, Mr Orange, facili-tated the turnaround process at the beginning of the 1980s when he publiclyconfronted Green and encouraged Black to manage the divestment process.Orange’s role was essential because he was the representative of the state;that is, of the principal owner.

Elaboration 11: The corporation is forced to find new solutions and aconsensus for a turnaround starts to develop.

11. Departure: The hero leaves home

Propp categorizes hero personae as seeker and victim heroes. Seeker heroesleave home (i.e. the company) to seek something, for example a lost child ina folktale. A victim hero is forced to leave home without the seeking function.Accordingly, the driving out of Yellow in 1974 can be interpreted as a victimhero case, as can Black’s heart disease and consequent care in a hospital in1976. In both cases, the embodiment of the tradition of professional strate-gic management left Enso. This particular skill is thus the hero rather thanthe persons of Yellow or Black. At a more abstract level, this describes howthe dominant forces of the decline create friction and barriers to the creationof a new strategic harmony and the implementation of a turnaround.

Elaboration 12: The institutionalized forces of decline obstruct theimplementation of a turnaround and the construction of a new basisfor strategic harmony.

12. The first function of the donor: The hero is tested,interrogated, attacked, etc., which prepares the way for hisreceiving either a magical agent or helper

During 1975–1977, Enso drifted to the nadir of its decline. The cumulativelosses for 1971–1976, for instance, were 4 billion euros (at 2002 values),while the return on employed capital (ROE) was approximately 2 percent.Some production segments were in even worse condition. In the paperboardand pulp group, the ROE had varied between –2.4 and 0 by the end of the1960s. In 1980, the only profitable groups were packaging and forestry,whereas shipping, for example, had been unprofitable for all of the 1970s.As one analysis described the situation in 1977, the mills were in ‘shockinglybad condition’ (Kaukopää Mill) and ‘[had been] seemingly under-investedfor decades’ (Pankakoski Mill). In comparison with international and



domestic competitors, Enso was less productive and less profitable, and itsproblems were visibly endogenous. Overall, Enso was in a serious crisissituation. At this point, the company had two options: exit or turnaround.Equally, some of the key personages in the process, Black and Orange, were‘tested’ several times during the 1970s before they were able to interveneefficiently in the early 1980s. Partly as a consequence of his problems withGreen, an attempt was made to drive Black out of the company. At the sametime, Orange had the same powerless position in the Ministry of Trade andCommerce, being forced to follow President Kekkonen’s will.

Elaboration 13: The nadir of the decline is reached and the organiz-ation’s future options are limited to exit or turnaround.

14. Provision or receipt of a magical agent: The hero acquiresthe use of a magical agent

The magical agent is a crucial morphological element in folktales. With themagical agent the hero is able to subdue the villain and thus return pros-perity to the house. In Enso’s case, we found three objects that clearly fulfillthe role of a magical agent. First, the Scandinavian consulting group SIARanalyzed Enso’s situation in 1977. In their report, Enso’s dysfunctions wereexpressed for the first time in an analytical manner. What is more import-ant, the report legitimated the majority of the demands of Black and otherexperienced paper and pulp specialists. The SIAR report, for example,questioned Enso’s strategic planning and control procedures as well as itsaccounting system, diversification policies, and organizational structure. Thereport was based on an extensive number of interviews with top and linemanagers and thus reflected the attitudes of the managerial circle of thecompany. In the following year, KOP, the biggest lender to the company,warned in its annual report that Enso would be bankrupt in three yearsunless there were widespread retrenchments. These two reports increased theawareness of severe crisis among crucial stakeholders, especially in theMinistry of Trade and Commerce, and thus facilitated the beginning ofconcrete turnaround operations. Finally, in 1982 a special audit publiclyannounced Enso’s critical situation in terms of its heavy debt burden andoperational problems in its shipping and overseas business, thus makingpossible Green’s replacement and the start of the turnaround. Simul-taneously, the Finnish press increasingly attacked Enso’s managerial situationand thus smoothed the path to a turnaround. Internal awareness of theconsequences of the crisis had not been enough to overcome the underlyingforces of decline. Thus, these external forces were needed to drive the



organization into a situation that would make possible the required turn-around operations and the construction of a new strategic harmony.

Elaboration 14: External forces are needed to drive an organizationinto a situation that offers a solid basis for a successful turnaround andthe construction of strategic harmony.

15. Spatial transference between two kingdoms, guidance:The hero is transferred, delivered or led to the whereabouts ofan object of search

In this function, the hero is led to a route or a route is shown to him. In ourcase, the route can be interpreted as a vision about the situation and how toget out of it. It is noteworthy that no single person created the vision. Onthe contrary, it emerged inside the company and among the crucial stake-holders during the latter part of the 1970s. This is quite evident, taking intoconsideration the aforementioned reports and the company’s internaldocuments, including strategic plans and correspondence. Already in 1973,Yellow outlined the need to focus back to Enso’s core competencies in thepaper and pulp industry, and also the McKinsey report in 1971 gave theadvice to drop shipping from the portfolio. Finally, during 1977–1978,Enso’s financial management indicated through its loan applications themajor characteristics of the future turnaround.

Elaboration 15: As a result of external triggers and the creation of aninternal consensus for change, a route to the turnaround is outlined.

16. Struggle: The hero and the villain join in direct combat

In the morphological sense, the direct combat between the villain and thehero occurred in an open field. In our case this means both publicly andinside the company. The Proppian combat around Enso got seriouslyunderway when President Kekkonen had to retire in 1981. WithoutKekkonen’s support, Green was unable to maintain his position in the politi-cal struggle with the Ministry of Trade and Commerce. During 1981–1982,representatives of the ministry demanded several times that Green leave thecompany, and after an extra audit Green finally resigned. However, theposition of Green had already been weakened before the final phases, andBlack was able to start an extensive divestment process in 1981. Thus, theforces described earlier had eliminated the institutionalized position of thedisharmony, but some of the underlying forces of the decline were still



working against a turnaround. However, their effects were gradually vanish-ing as a result of increasing consensus.

Elaboration 16: The main barriers against a turnaround vanish as aresult of consensus.

19. The initial misfortune is liquidated

After Green’s resignation, Enso divested the majority of its unrelated busi-nesses, including shipping and power production. At the same time, Blackstarted a major redirection of the company’s strategy, which eventually ledto the successful period in the 1990s, involving solid economic performance,rapid growth, and a leading market position in various paper grades. Inmaking the turnaround successful, it was essential for Enso to be able toobtain financial resources from the Finnish government, and banks, as wellas from divestments. This capital was used for technological improvementsin its paper and paperboard business, as a result of which it was possible todevelop new products for higher quality markets.

Elaboration 17: A successful turnaround and a return to integrated andcommonly accepted harmony.

31. Wedding: The hero is married and ascends to the throne

In quest-type folktales, a wedding symbolizes the return to prosperity. InEnso, the return happened relatively slowly after consensus on the strategicdirection had been achieved and strategic harmony had returned to theorganization. During the 1980s, Enso implemented plans that had beenoutlined during 1978–1981 and concentrated increasingly on certain coreareas of business, primarily in paper and board production. At the end ofthe 1990s, Enso finally achieved the position of the world’s second-largestpaper and pulp producer, after almost a decade of solid profitable perform-ance.

Elaboration 18: Return to prosperity.

Identification of mechanisms

After emplotting the decline and turnaround case into the Proppian frame-work, we aim to illustrate how the elaborations may be linked to each otherin terms of the mechanisms driving the whole process.



Burgelman (1994) defines strategic change as a transformation fromstrategic harmony to disharmony and the reverse. Partly following this defi-nition, the two meta-level elements of organizational decline and turn-around are defined as the diffusion of strategic disharmony and thediffusion of new harmony. The outcome of the former is an existence-threatening organizational crisis, whereas the latter results in a return toprosperity. In contrast to earlier research (Balgobin & Pandit, 2001;McKiernan, 2003; Robbins & Pearce, 1992), we are not interested in theseparate stages in the process as such, but in the underlying mechanismsthat drive the organizational evolution regarding the dis-harmonization andre-harmonization of strategy.

In morphological analysis, some functions are necessary for the forma-tion of a narrative, whereas others can be omitted from the sequential orderwithout destroying the narrative structure (Propp, 1928/2000; Todorov,1990). Accordingly, we distinguished and further elaborated 18 componentsthat describe the underlying structure of the Enso-Gutzeit decline and turn-around process. These components generate seven mechanisms – interreg-num, institutionalization, complication, counteraction/reaction, externalcatalyst, open battle, and harmonization – that drive organizations from onestate to the other, and finally to the outcome. Figure 2 depicts the elaboratedcomponents and the mechanisms.

In the initial stages, before organizational decline, strategic harmonyrefers to a situation in which the different factors and functional units are inharmony. As a result of the activation of the first mechanism, the interreg-num, an organization loses its strategic harmony and drifts into a state ofdisorder and decline (Elaborations 1–3). In Enso’s case, the decline startedwhen the old generation of managers retired from the company. Becausestrategic management had become personified, the harmony betweenstrategic knowledge and action was lost. However, the initial absentationdoes not need to be personified. It can be any event or action that worksagainst the basis of coherent corporate wisdom and contributes to organiz-ational decline. Even if the disintegration of strategic harmony is observed,as in the case of Enso, objections to the lost harmony are openly opposed.This prevents the direct return to harmony.

The interregnum may not lead to immediate, easily observableconsequences for the organization’s performance. As a result, objectionsdisperse and the organization becomes more vulnerable to emotionalimpulses. Strategic disharmony begins to become institutionalized. Theconducted strategic actions, in Enso’s case investments in shipping andoverseas production facilities, catalyze the diffusion of disharmony byforcing the company to adapt to a harmful progression. Finally, the



mechanism of institutionalization (Elaborations 4–7) drives the organizationinto a situation where decline becomes an accepted way of being. Typically,the institutionalization of disharmony is legitimized through the use of strongmanagerial rhetoric. In Enso, internationalization and shipping investmentswere rationalized by referring to intensified international competition and achanged, turbulent business environment.

At the same time as the disharmony reaches a legitimized position inthe organization, the direct consequences of the decline diffuse throughoutthe organization and become more visible. However, the newly establishedstrategic disharmony impedes the required responses. The mechanism ofcomplication (Elaborations 8–10) then reinforces the decline and drives theorganization to a situation of deepest crisis. In sum, we suggest that the inter-regnum, the institutionalization of disharmony, and the complication are thethree causal, interrelated mechanisms in intra-organizational evolution thatmake possible the diffusion of disharmony throughout the whole organiz-ation and finally drive the organization to explicit crisis.

The organization is already in the midst of the crisis before the explicitcounteraction against the decline starts. The mechanism of counteraction(Elaborations 11–13) produces knowledge of the decline, thus opposing the


Harmony

Dis-harmony

Time

E1

E2

E3

E4

E5

E6

E7

E8E9

E11 E12

E14

E15

E16

Interregnum

Institutionalizationof disharmony

Complication

Counteractionreaction

Externalcatalyst

E18

Open battle

Harmonization

E17

E10

E13

Figure 2 Underlying structure and causal mechanisms of decline and turnaround process


reign of disharmony. In Enso, the disharmony was seen as a negative finan-cial performance and organization dysfunctions, which led to the accumu-lation of criticism throughout the organization. However, the dominatingforces of the disharmony prevent the mechanism of counteraction fromproducing any concrete changes in the organization. In fact, the crisis mayeven deepen, as happened in Enso. Thus, the mechanism of counteractiondrives the organization into a situation that allows criticism of the estab-lished disharmony to develop.

Thereafter, the mechanism of external catalyst (Elaboration 14) isneeded to drive the organization into a situation that makes possible the turn-around and the construction of new strategic harmony. Consequently, anorganizational turnaround is not just a matter of the implementation of turn-around measures; rather, it is a matter of a battle against the forces ofstrategic disharmony. Thus, realization of the implementation phase requiresthat the mechanism of counteraction has produced a correct understandingof the decline and that the external catalyst has driven the organization intoa situation that makes the concrete turnaround possible. Moreover, theexplicit turnaround is not only an implementation of turnaround measures,but also consensus-building throughout the organization. Accordingly, in ourmorphological model, the main function of the mechanism of open battle(Elaborations 15 and 16) is to eliminate the main forces of the decline andto construct the basis for the return to strategic harmony. The mechanism ofharmonization (Elaborations 17 and 18) therefore also includes typical turn-around measures. However, its main function is not to work against theforces of decline, but rather to support the effective return to prosperity. Insum, we suggest that counteraction, external catalyst, open battle, andharmonization are the four causal and interrelated mechanisms that makepossible the diffusion of new harmony and drive the organization from thecrisis back to prosperity.

Discussion

Organization theorists (Hirsch, 1986; Schneider & Dunbar, 1992) haveproposed that folktales offer rich insights for research on organizationalchange and crises because their prime function is to deliver informationon human and group behavior in existence-threatening situations. Asdecline and turnaround is explicitly a sub-phenomenon of crisis situations,the folktale perspective, in general, and Vladimir Propp’s analyticalschema, in particular, offered us a rich resource in explaining and under-standing the underlying structure in the process of organizational decline



and turnarounds. Propp’s framework illustrates how folktales are processesdeveloping from initial prosperity through various functions to a positiveend. Our theoretical insight deriving from the Proppian schema is thatorganizational decline and turnaround is a process that proceeds from strate-gic harmony to disharmony and back to harmony through the influence ofseveral underlying mechanisms that consist of a set of elaborated functions.

By concentrating on only one organization during an entire process oforganizational decline and turnaround, it was possible for us to examinecomprehensive historical material with a detailed knowledge of thecompany’s strategic management. However, the chosen research design alsocontains some limitations. First, our approach is suitable primarily for theanalysis of successful turnarounds. Thus the study does not consider causesand processes related to organizational death, acquisitions, and other formsof radical restructuring. Second, our research focuses on a single companythat operates in a mature industry. In addition, the peculiar governance struc-ture of Enso limits the possibilities for theoretical generalizations. Finally,although the research is part of a larger project intended to study organiz-ational decline and turnarounds, it would have been fruitful to compareEnso’s development systematically with that of other organizations.

The fundamental point, however, is that we were able to make the deepstructure and unconscious mechanism that affected Enso’s decline and turn-around process more intelligible by using Propp’s theory. This, we believe, isalso strong support for Propp’s theory, and more generally clarifies the crucialrole that quest-type folktales have as transmitters of fundamental knowledgeof human and group behavior. They do that in a narrative form presented inan easily understandable and memorable way, but under this cover theirfundamental purpose is to transmit and reflect basic information of groupbehavior related to survival that, as Propp showed, follows a particularnarrative structure independent of the story that is used to ‘decorate’ thisinformation.

These results and conclusions raise several implications. We proposethat our elaborations of the basic functions and the suggested governingmechanisms truly reflect the unconscious deep-level structure of organiz-ational decline and turnaround processes. Our argument is not that each andevery process, in history and in the future, will follow the narrative structurein the form as presented here, but we believe that through this morphologyand the governing mechanisms we can make organizational behavior indecline and turnaround processes more transparent.

From a practical standpoint, the first insight concerns the role ofleadership in decline and turnaround situations. In the literature, thisquestion remains more or less unresolved (see, for example, Barker & Mone,



1998), but managers tend to believe on the basis of intuition that strongleadership is needed in radical change processes and that it is even better ifthe turnaround leader comes from outside the company. Our proposition,however, is that the leadership question is far from simple, because a particu-lar person can be attached to many roles in the dramatis personae. Forexample, Black, Enso-Gutzeit’s turnaround leader, was involved in manydecision-making processes that institutionalized the strategic disharmony. Infact, Black had adjusted to the ‘machinery’ that had maintained the dishar-mony for many years, and for example, made the disastrous decision toinvest in a cruise liner for the Indian Ocean only a couple of years before theimplementation phase of the turnaround. Equally, Green was most certainlyincapable of leading the company toward new strategic harmony. However,it is unsure how much his personal villainy was responsible for driving Ensoto near-bankruptcy. Thus, the implication for practical managerial work isthat, instead of managing only the processes and personnel in crisis organiz-ations, managers should also focus effort on revealing how the institution-alized underlying structural forces, manifested, for example, inorganizational culture(s) and mental models, are supporting the disharmony.Moreover, managers should stretch their analytical timeframe to cover theentire process of decline in order to gain a full understanding of the under-lying forces maintaining the disharmony.

Finally, the fundamental question deals with the existence of deepmechanisms of decline and turnarounds. By adopting the folktale frame-work, we simultaneously accepted a basic philosophy that identifies tales andmyths as something between reality and text (Bettelheim, 1976). By contrast,we distinguish our interpretation of a text or story as well. This follows thepsychoanalytic stream of folktale research (Bettelheim, 1976; Moxnes,1998). We recognize that our approach is problematic in many ways andthat we may not have comprehensively interpreted our own role in theprocess. However, as Moxnes (1999) stated, we (also) may need latitude inour still-speculative work. Perhaps neither of the purely-realistic or purely-narrative perspectives are correct if we follow Moxnes’ statement thatorganizational actors are ‘Manimals’ that include both animalistic andcultural elements.

Acknowledgements

This research was funded by the LIIKE program of the Academy of Finland andTEKES. The authors wish to thank the organizers and participants of the 18thEGOS Colloquium and 2003 Academy of Management Conference (ODC) for



helpful comments. Moreover, we gratefully acknowledge the comments andsupport by Juha Laurila, Henri Schildt and Henrikki Tikkanen. Both authorscontributed equally to this study.

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Appendix A

Functions of dramatis personae (Propp, 1928/2000)

1. Member of family leaves home (hero introduced)2. Interdiction addressed to hero (‘don’t go there’, ‘go to this place’)3. Interdiction violated (villain enters tale)4. Villain makes attempt at reconnaissance (either villain tries to find

children/jewels, etc., or intended victim questions villain)5. Villain gains information about victim6. Villain attempts to deceive victim to take possession of victim or

victim’s belongings (trickery, villain disguised, tries to win confidenceof victim)

7. Victim taken in by deception, unwittingly helping enemy8. Villain causes harm/injury to family member (by abduction, theft of

magical agent, spoiling crops, plunders in other forms, causesdisappearance, expels someone, casts spell on someone, substituteschild etc., commits murder, imprisons/detains someone, threatens



forced marriage, provides nightly torments). Alternatively, member offamily lacks something or desires something (magical potion, etc.)

9. Misfortune or lack is made known, (hero is dispatched, hears call forhelp, etc./alternative is that victimized hero is sent away, freed fromimprisonment)

10. Seeker agrees to or decides upon counter-action11. Hero leaves home12. Hero is tested, interrogated, attacked, etc., preparing way for his/her

receiving magical agent or helper (donor)13. Hero reacts to actions of future donor (withstands/fails the test, frees

captive, reconciles disputants, performs service, uses adversary’spowers against them)

14. Hero acquires use of magical agent (directly transferred, located,purchased, prepared, spontaneously appears, eaten/drunk, help offeredby other characters)

15. Hero is transferred, delivered or led to whereabouts of object of search16. Hero and villain join in direct combat17. Hero is branded (wounded/marked, receives ring or scarf)18. Villain is defeated (killed in combat, defeated in contest, killed while

asleep, banished)19. Initial misfortune or lack is resolved (object of search distributed, spell

broken, slain person revived, captive freed)20. Hero returns21. Hero is pursued (pursuer tries to kill, eat, undermine hero)22. Hero is rescued from pursuit (obstacles delay pursuer, hero hides or is

hidden, hero transforms unrecognizably, hero saved from attempt onhis/her life)

23. Hero unrecognized, arrives home or in another country24. False hero presents unfounded claims25. Difficult task proposed to hero (trial by ordeal, riddles, test of

strength/endurance, other tasks)26. Task resolved27. Hero is recognized (by mark, brand, or thing given to him/her)28. False hero or villain is exposed29. Hero is given new appearance (is made whole, handsome, new

garments, etc.)30. Villain is punished31. Hero marries and ascends throne (is rewarded/promoted)



Appendix B

Unpublished sources and magazines

Archival sources

Elinkeinoelämän keskusarkisto, MikkeliEnso-Gutzeit archive

1. Annual reports 1945–20002. Board minutes 1960–19813. Strategic planning documents 1966–19824. Circular letters 1965–19825. KOP’s audit reports 1975–19816. McKinsey presentations and reports 1969 and 19717. SIAR report 19778. Green’s correspondence 1974–19829. Black’s correspondence 1974–1982

10. Yellow’s correspondence 1968–197411. Veli Korpi’s correspondence 1977–1982

Magazines

1. Helsingin Sanomat 1976–19822. Hymy 1971–19823. Kauppalehti 1976–19824. Seura 1971–19825. Talouselämä 1945–1985

Juha-Antti Lamberg is a researcher and lecturer at Helsinki Universityof Technology. He received his PhD in economic history at the Universityof Jyväskylä. His research interests include organizational change, historyand theory of strategy and institutional theory. He has published articlesin Business & Society, European Management Journal, Management Decision,Scandinavian Economic History Review, International Studies of Management& Organization and other journals. He is also co-editor of The evolution ofcompetitive strategies in global forestry industries: Comparative perspectives(Springer, 2005).[E-mail: [email protected]]



Kalle Pajunen received his PhD in strategic management from TampereUniversity of Technology, where he is currently working as a seniorresearcher. He also holds an MA in economic history from the Universityof Jyväskylä. His research interests include research methodologies, phil-osophy of social sciences, decline and turnaround processes, interna-tionalization processes, stakeholder theory, strategic leadership andbusiness ethics.His latest articles appear for instance in Advances in Strate-gic Management and Journal of Business Ethics.[E-mail: [email protected]]



beyond the metaphor:the morphology of organizational

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