WHAT IS ORGANIZATIONAL CHANGE?

Organizational change: the process by which organizations move from their present
state to some desired future state to increase their effectiveness.
Goal is to find improved ways of using resources and capabilities in order to increase
an organizations ability to create value.
Targets of change include improving effectiveness at four different levels:
1.
2.
3.
4.

Human resources
Functional resources
Technological capabilities
Organizational capabilities

1. Human Resource changes include:

1. Investment in training and development
2. Socializing employees into the organizational culture
3. Changing organizational norms and values to motivate a multicultural and
diverse workforce
4. Promotion and reward systems
5. Changing the composition of the top- management team
2. Functional Resources changes Include:
I.
Transferring resources to the functions where the most value can be created in
response to environmental change
II.
An organization can improve the value that its functions create by changing its
structure, culture, and technology
3. Technological capabilities changes include:
i. Efforts intended to give an organization the capacity to change itself in
order
to exploit market opportunities
ii. Adoption and use of new technologies
iii. Development of new products/ technologies and the changing of existing ones
Technological capabilities are a core competence
4. Organizational capabilities changes include:
Changing organizational design
Culture and structure
Changing strategy
Changes that permeate entire organization

LEVINS FORCE-FIELD THEORY OF CHANGE

Argues that two sets of opposing forces within an organization determine how change
will take place.
1.

Forces for change and forces making organizations resistant to change

2.

When forces for and against change are equal, the organization is in a state of inertia

3.

To change an organization, managers must increase forces for change and/or decrease
forces resisting change

TYPES OF CHANGE IN ORGANIZATIONS

Evolutionary change:

change that is gradual, incremental, and narrowly focused

Revolutionary change:

change that is sudden, drastic, and broadly focused

DEVELOPMENTS IN EVOLUTIONARY CHANGE

Sociotechnical systems theory: a theory that proposes the importance of changing
role and task or technical relationships to increase organizational effectiveness
Total quality management (TQM): an ongoing and constant effort by all of an
organizations functions to find new ways to improve the quality of the organizations
goods and services
Flexible workers and Flexible work teams.
DEVELOPMENTS IN REVOLUTIONARY CHANGE

Restructuring: changing task and authority relationships and redesigning

organizational structure and culture to improve organizational effectiveness
Downsizing: the process of streamlining the organizational hierarchy and laying off
managers and workers to reduce bureaucratic costs
Innovation: the process by which organizations use their skills and resources to:
Create new technologies
Develop new goods and services
Better respond to the needs of their customers
One of the most difficult instruments of change to manage

LEVINS THREE-STEP CHANGE PROCESS

CHANGE MODELS: MCKINSEYS 7S

CHANGE MODELS: KOTTER

CHANGE MODELS: ADKAR

MANAGING CHANGE: ACTION RESEARCH

Action research: a strategy for generating and acquiring knowledge that managers
can use to define an organizations desired future state.
Used to plan a change program that allows the organization to reach that state.
Helps in the unfreezing, changing and refreezing process.
ORGANIZATIONAL DEVELOPMENT (OD)

Organizational development (OD): a series of techniques and methods that managers can
use in their action research program to increase the adaptability of their organization.
Goal is to improve organizational effectiveness and to help people in organizations
reach their potential and realize their goals and objectives.
Can be used to unfreeze, change, and refreeze attitudes and behaviors.
ORGANIZATIONAL DEVELOPMENT (OD)
OD TECHNIQUES TO DEAL WITH RESISTANCE TO CHANGE Education and communication: inform workers about change and how they will be affected
Participation and empowerment: involve workers in change
Facilitation: help employees with change
Bargaining and negotiation
Manipulation: change the situation to secure acceptance
A Coercion: force workers to accept change

OD TECHNIQUES TO PROMOTE CHANGE:

Counseling, Sensitivity training, and Process consultation.
A Team building, Intergroup training, and Organizational mirroring.
A Total organizational interventions.
Organizational confrontation meeting.

CHANGE INITIATIVES & SUSTAINABILITY

WHY PEOPLE RESIST CHANGE

1.
2.
3.
4.
5.
6.
7.
8.

Fear of the unknown

Unaware of future dangers
Complacent
Unaware of benefits of change
Unable to deal with uncertainty
See change as a personal threat
Afraid own kingdom will be toppled
Cannot envisage future

OVERCOMING RESISTANCE TO CHANGE

1.
2.
3.
4.
5.
6.

Mobilize commitment
Develop a Shared Vision
Foster consensus and competence
Spread revitalization
Institutionalize revitalization
Monitor and adjust strategies

ORGANIZATIONAL TRANSFORMATION
Its important for a business owner to know the different stages of organizational
transformation, along with the unique opportunities and challenges that each stage
entails.

Introduction
1. Start-up phase where a business determines what its core strengths and
capabilities are.
2. The main challenge is to make sure the initial product or service is right.
3. Its important to document what works and what doesnt work during this stage.

Early Growth
1.
2.
3.
4.

Generally characterized by increasing sales and heightened complexity.

Two important things must happen for a business to be successful in this stage.
The founder must start working on the business rather in the business.
Increased formalization must take place, and the business has to start developing
policies and procedures.

Continuous Growth
1.
2.
3.
4.

The need for structure and formalization increases.

Often the business will start developing related products and services.
The toughest decisions take place in this stage.
One tough decision is whether the owner of the business and the current
management team has the experience and the ability to take the business further.

Maturity
1. A business enters the maturity stage when its growth stalls.
2. At this point, a firm is typically more intently focused on managing efficiently
than developing new products.
3. Well-managed firms often look for partnering opportunities or opportunities for
acquisitions or licensing deals to breath new life into the firm.
4. If new growth cannot be achieved through a firms existing product mix, the next
generation of products should be developed.
Decline
1. It is not inevitable that a business enter the decline stage.
2. Many American businesses have long histories and have adapted and survived
over time.
3. A businesss ability to avoid decline hinges on the strength of its leadership and its
ability to adapt over time.

ORGANIZATIONAL TRANSFORMATION
Integrated Transformation Approach
Many senior managers today are aggressively trying to transform their companies,
seeking radically to improve performance by changing behavior and capabilities
throughout the organization. Unfortunately, most leadership groups lack a proven way of
thinking about the challenge.
Although each company's program is unique, the successful programs have developed

points of view on three types of initiatives 1. Top-down direction setting

2. Bottom-up performance improvement
3. Core process redesign

ORGANIZATIONAL TRANSFORMATION
1. Top-down direction setting

to create focus throughout an organization and develop the conditions for

performance improvement.

2. Broad-based, bottom-up performance improvement to get people at all levels to take

a fresh approach to solving problems and improving performance.
3. Cross-functional core process redesign to link activities, functions, and information
in new ways to achieve breakthrough improvements in cost, quality, and timeliness.

Together, these three axes (see Exhibit 1) make up what we think of as a

"transformation triangle"a balanced, integrated framework for
combining separate initiatives into a coherent overall program.

Each axis is necessary. If top-down initiatives are lacking or faulty,

managers will be left to guess where to aim new skills or activities.

If bottom-up involvement is absent, motivation will falter, momentum will

flag, opportunities for improvement will be overlooked, and the new skills
and behavior will not be built.

If horizontal core processes are ignored, function-specific efforts will

never add up to the critical mass of change required.

Real transformations in performance come only whenefforts along all

three axes are coordinated and engaged.

STRATEGIES FOR CHANGES

STRATEGIES FOR CHANGE

Directive Strategy:

This strategy highlights the manager's right to manage change and the use of
authority to impose change with little or no involvement of other people.

The advantage of the directive approach is that change can be undertaken quickly.
However, the disadvantage of this approach is that it does not take into
consideration the views or feelings of those involved in, or affected by, the
imposed change.

This approach may lead to valuable information and ideas being missed and there

is usually strong resentment from staff when changes are imposed rather than
discussed and agreed.
Expert Strategy:

This approach is usually applied when a technical problem requires solving,

such as the introduction of a new IT system, and as such is better suited to smaller
technical or operational change than a wider cultural - change requirement.

It is also appropriate that introducing technical changes does not easily lend itself
to wider consultation as knowledge of the technical nuances may reside only with
a limited number of individuals.

Negotiation Strategy:

This approach highlights the willingness on the part of senior managers to

negotiate and bargain in order to effect change. Senior managers must also accept
that adjustments and concessions may need to be made in order to implement
change.

This approach acknowledges that those affected by change have the right to have
a say in what changes are made, how they are implemented and the expected
outcomes.

The disadvantage to this approach is that it takes more time to effect change, the
outcomes cannot be predicted and the changes made may not fulfill the total
expectations of the managers affecting the change.

The advantage is that individuals will feel involved in the change and be more
supportive of the changes made.

Educative Strategy:

This approach involves changing people's values and beliefs - 'winning hearts and
minds', in order for them to fully support the changes being made and move
toward the development of a shared set of organizational values which individuals
are willing, and able to support.

A mixture of activities will be used: persuasion; education; training and selection,

led by consultants, specialists and in- house experts.

Again, the disadvantage of this approach is that it takes longer to implement. The
advantage is that individuals within the organization will have positive
commitment to the changes being made.

Participative Strategy:

This strategy stresses the full involvement of all of those involved in, and affected

by, the anticipated changes. Although driven by senior managers, the process will
be less management-dominated and driven more by groups or individuals within
the organization.

The main disadvantages of this process are the length of time taken before any
changes are made. It can be more costly due to the number of meetings that take
place, the payment of consultants/ experts over a longer time period and the
outcomes cannot be predicted.

However, the benefits of this approach are that any changes made are more likely
to be supported due to the involvement of all those affected, the commitment of
individuals and groups within the organization will increase as those individuals
and groups feel ownership over the changes being implemented.