Organisational Transformation

25/11/2013
Strategy and Transformation

Success can work against a company when it looses touch with customers. Radical changes may be only choice for organization in desperate need of change.
Organisational Development and Transformation
Organization Transformation and Strategic Change
Kirupa Priyadarsini
MBA2012, August 2013
Kirupa Priyadarsini
Organizational Transformation
OT refers to drastic changes in:
Organisational Development and Transformation Organisational Development and Transformation
OT may or may not be developmental. OT tends to use directive, not participative, approaches to change. Usually top-down, top-management driven. OT shaped by use of power rather than collaboration.
(part 2 of 3)
(part 1 of 3)
How organization functions. How it relates to environment.
OD strategies represent more gradual approaches to strategic change. OT approaches are drastic and abrupt change.
Kirupa Priyadarsini
Kirupa Priyadarsini
Requires:
(part 3 of 3)
Large-Scale Change Strategies

Incremental.
Shared vision. Willingness to clean house. Restructure. Tackle many problems.
Long-term planned change. Relies upon collaboration.
Due to immediate threat, this may be only way for organization to survive.
Transformative.
Immediate, drastic change. Uses directive methods.
Kirupa Priyadarsini
Kirupa Priyadarsini
25/11/2013
Large-Scale Change Model

Model based on 3 key dimensions.
Strategies for Planned Change
1. Time frame of changeshort or long. 2. Level of support of organizational culture. 3. Degree of discontinuity with environment.
Kirupa Priyadarsini
Kirupa Priyadarsini
Four Change Strategies (part 1 of 2)

1. Participative evolution.
Four Change Strategies (part 2 of 2)

3. Forced evolution.
Incremental adjustments over longer period without support of culture.
Incremental and anticipates change. Support of culture through collaborative means.
2. Charismatic transformation.
Radical change in short time with support of culture.
4. Dictatorial transformation.
Used in times of crisis. Major restructuring running counter to internal culture.
Kirupa Priyadarsini
Kirupa Priyadarsini
Results of OT
OT may be best or only way to bring back an organization under immediate threat. OT more likely to be used by externally recruited managers. OT is risky and outcome is uncertain.
The Corporate Culture

System of shared values held by members that distinguishes one organization from another. CEO and managers actions, not words, produce culture. A culture is organizations major strength when consistent with strategies.
Kirupa Priyadarsini
Kirupa Priyadarsini
25/11/2013
Strategy-Culture Fit
Strategy:
Core Characteristics of Culture

Individual autonomy. Sensitivity to customers and employees. Managers provide support and assistance. Employees initiate new ideas. Openness of communication channels. Risk-seeking encouraged.
Kirupa Priyadarsini
Course of action used to achieve objectives. Relates resources of organization to opportunities in environment.
Culture:
Set of values for setting priorities. Critical factor in implementation of strategy.
Kirupa Priyadarsini
Sharing the Vision

Management theorists feel vision is essence of leadership. Vision involves several stages.
Share the vision. Empower the individual. Develop trust. Reward performance.
Sharing the Vision
Kirupa Priyadarsini
Kirupa Priyadarsini
Strong Versus Weak Cultures

Strong culture.
Basic values intensely held and widely shared.
Relative Strength of Cultures
Weak culture.
May be seen in young company or one with high turnover.
Culture is product of key components.

Structure, systems, people, and style.
Kirupa Priyadarsini
Kirupa Priyadarsini
25/11/2013
Strategy-Culture Matrix (part 1 of 4)

Four basic alternatives in determining strategy changes: 1. Manage change (manageable risk).
Change important and compatible with culture. Use cultural reinforcement as strategies.

2. Reinforce culture (negligible risk).
Forge vision that emphasizes shared values. Reinforce existing culture.
Kirupa Priyadarsini
Kirupa Priyadarsini

3. Manage around culture (manageable risk).

4. Change strategy to fit culture (unacceptable risk).
Change important but incompatible with culture. Changing culture is explosive, long-term process that may be impossible.
Change important and incompatible with present culture. Reinforce value system, reshuffle power, use leverage in the organization.
Kirupa Priyadarsini
Kirupa Priyadarsini
Strategy-Culture Matrix
Strategic Change Management

Seeks to align organizations strategy, structure, and human resources to fit environment. Parts of system in perpetual interaction with environment.
Kirupa Priyadarsini
Kirupa Priyadarsini
25/11/2013
Organizations Composed of 3 Systems

Environmental Forces and Organizational Systems
Technical - solve production problems. Political - solve allocation problems of resources and power. Cultural - solve value/belief problems.
Kirupa Priyadarsini
Kirupa Priyadarsini
Three Steps to Strategic Change

Step 1: Develop image of desired organization. Step 2: Separate systems and intervene separately in each one. Step 3: Plan for reconnecting three systems.
Reasons for Large-Scale Cultural Changes

Company has strong values that do not fit changing environment. Industry competitive and changes quickly. Company mediocre or worse. Firm about to join ranks of very largest. Firm small but growing rapidly.
Kirupa Priyadarsini
Kirupa Priyadarsini
Cautions in Cultural Change

Cultural change can be difficult and time consuming. Should be attempted only after less-difficult solutions have been ruled out.
OD Application Transformation at Home Depot

Home Depot is number-one homeimprovement retail chain in U.S. It had unstructured and entrepreneurial culture. Competitor Lowes began taking market share.
Kirupa Priyadarsini
Kirupa Priyadarsini
25/11/2013
Kirupa Priyadarsini
Nardelli was brought in as CEO to turn around dysfunctional culture. Nardelli brought in new top management team. Lacked support from lower levels. Changes resulted in unintended consequences.
Culture became one of revolt. Innovation and sense of ownership declined. When market share declined more, board replaced Nardelli with Ellison. Ellison has made methodical and longrange changes.
Kirupa Priyadarsini
Concept Challenge
Culture.
Reflects organizations past and is rooted in firms history.
Strategic change management.

Focus on alignment with strategy, structure, and human resources systems.
Incremental approach.
Long-term planned change that relies on collaboration.
Strategy.
Course of action used to achieve major objectives.
Organization transformation (OT).

Drastic, abrupt change to structure, management, and culture.
Kirupa Priyadarsini
Strategy-culture matrix.
Assess readiness of culture for strategic changes.
Kirupa Priyadarsini
Technical, political, and cultural systems.

Organizational systems of strategic change management model.
Transformational change.
Immediate drastic change accomplished by directive methods.
Vision.
Mental image of a possible and desirable future state of organization.
Kirupa Priyadarsini

Organisational Transformation

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25/11/2013

Strategy and Transformation

Organisational Development and Transformation

Organization Transformation and Strategic Change

Organisational Development and Transformation

MBA2012, August 2013

MBA2012, August 2013

How organization functions. How it relates to environment.

MBA2012, August 2013

MBA2012, August 2013

Large-Scale Change Strategies

Shared vision. Willingness to clean house. Restructure. Tackle many problems.

Long-term planned change. Relies upon collaboration.

MBA2012, August 2013

MBA2012, August 2013

Large-Scale Change Model

Strategies for Planned Change

MBA2012, August 2013

MBA2012, August 2013

Four Change Strategies (part 1 of 2)

Four Change Strategies (part 2 of 2)

Incremental and anticipates change. Support of culture through collaborative means.

MBA2012, August 2013

MBA2012, August 2013

The Corporate Culture

Organisational Development and Transformation

Organisational Development and Transformation

MBA2012, August 2013

MBA2012, August 2013

Core Characteristics of Culture

MBA2012, August 2013

MBA2012, August 2013

Sharing the Vision

Sharing the Vision

Organisational Development and Transformation

Organisational Development and Transformation

MBA2012, August 2013

MBA2012, August 2013

Strong Versus Weak Cultures

Relative Strength of Cultures

Culture is product of key components.

MBA2012, August 2013

MBA2012, August 2013

Strategy-Culture Matrix (part 1 of 4)

Strategy-Culture Matrix (part 2 of 4)

Organisational Development and Transformation

Forge vision that emphasizes shared values. Reinforce existing culture.

MBA2012, August 2013

MBA2012, August 2013

Strategy-Culture Matrix (part 3 of 4)

Strategy-Culture Matrix (part 4 of 4)

MBA2012, August 2013

MBA2012, August 2013

Strategic Change Management

Organisational Development and Transformation

Organisational Development and Transformation

MBA2012, August 2013

MBA2012, August 2013

Organizations Composed of 3 Systems

Environmental Forces and Organizational Systems

MBA2012, August 2013

MBA2012, August 2013

Three Steps to Strategic Change