OB II

Evolutionary and Revolutionary Change

Change that is gradual, incremental, and narrowly focused

Change that is sudden, drastic, and broadly focused

 Company in High-growth industries
Large
Companies in medium-growth
industries
Size of Organization

Companies in low-growth industries

Small

Young Age of Organization Mature

 Organizational Practices in Five Phases of
Growth
Category Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Measurement Make and Sell Efficiency of Expansion of Consolidation of Problem

focus Operation Market Organization solving and
innovation
Organizational Informal Centralized Decentralized Line staff and Matrix of
Structure and functional and Product group Teams
Geographical
Top- Individualistic Directive Delegative Watchdog Participative
Management and
Style Entrepreneurial
Control System Market Results Standards & Reports and Plans and Mutual Goal
Cost Centers Profit Center investment setting
centers
Management Ownership Salary and Individual Profit Sharing Team Bonus
Reward Merit Bonus and stock
Emphasis increases options
Weitzel and Jonsson’s Model of Organizational
Decline
Survival Strategy
 Forces for Change

Demographic Forces

Economic Forces
Social Forces
Ethical Forces

Global Forces
Competitive forces

Political Forces
 Resistance to Change

Organizational Level Structure

Culture
Strategy
Functional Level Difference in subunit Orientation
Power and conflict
Groupthink
Group Level Cohesiveness
Norms

Individual level
 Habit of following common
Technical Resistance
procedures

Agents in the BBU

Political Resistance
Simulation

Cultural Resistance Systems and procedures that

reinforce the status quo
Dealing with Resistance to Change… Some Strategies

Learn how people are

experiencing change

Empathy and Support Management is genuinely

interested in their feelings and
perceptions …

Uncertain about the

consequences of Change

Communication Lack of adequate information fuels

gossip and adds to the anxiety

Mode of communication

Participation and Involvement

 Change Agents

They often Must…

Give members emotional support

Maintain ‘psychological distance’ from others

Considerable Tension and Isolation

Support
Dimensions Theory E Theory O Theory (E + O)
of Change
Goals Maximize Develop organizational Embrace the paradox
shareholder value capabilities between …

Leadership Manage change from Encourage participation Set Direction from the
the top from the bottom up top and engage the
people below
Focus Emphasize Structure Buildup corporate Focus on the hard and
and Systems culture: employees’ the soft
behavior and attitudes

Process Plan and establish Experiment and Evolve Plan for Spontaneity
Programs

Reward Motivates through Use incentives to

system financial incentives reinforce change but not
to drive it
Dimensions Theory E Theory O Theory (E + O)
of Change
Goals Maximize Develop organizational Embrace the paradox
shareholder value capabilities between …

Leadership Manage change from Encourage participation Set Direction from the
the top from the bottom up top and engage the
people below
Focus Emphasize Structure Buildup corporate Focus on the hard and
and Systems culture: employees’ the soft
behavior and attitudes

Process Plan and establish Experiment and Evolve Plan for Spontaneity
Programs

Reward Motivates through Use incentives to

system financial incentives reinforce change but not
to drive it
GE’s Two Decades of
Transformation
 Strategy Structure Systems

Delayering
#1 or #2 Corporate Staff Strategic Planning
Fix, Sell, Close Organization layers (9 Detailed documents
to… 5 page playbooks

Downsizing Operating budgets

3 Circles Eliminated 123,450 Past comparisons

people External standards

Services
Invest in Technology
People & Invest in
Acquisitions R&D
Core
Reinvest in
Productivity
& Quality
 Work-Out People/ Leadership Value Added
Developing new Changing mindsets
processes, roles and and management style Globalization
relationships in GE
Building long-term
Leverage productivity Commitment to capability
Crotonville
Model new roles
Co-opt “session C”
Frontline initiative
Weed out “Type 4’
Management coaching

Operationalize culture

Speed, simplicity, self-

confidence
 Renewal
Stretch

Quality of Cross-Unit Integration

Discipline Support
Trust

Phillips GM Revitalization
Late 80s 1980 •Stretch
•Trust
IBM
L 80s

Rationalization
•Discipline
•Support

Quality of Individual unit performance

 Understanding organizational goals and strategies as
well as fitting design to various contingencies is the first
step towards understanding organizational effectiveness
• Organizational Effectiveness
– Internal vs. external
• Type of environment
• Technology
• Structure & Culture
• Leadership
Organizational Design Challenges
To determine the levels of vertical and horizontal
differentiation to reach organizational goals

CEO

Vertical
Differentiation

Improve Coordination
among subunits

Horizontal
Differentiation
To facilitate
specialization
How to Link and Coordinate organizational
activities

Differentiation
Higher the differentiation
the more complex the
integration mechanisms

Integration
 Who will make Decisions

Centralization

Risk Averse
Decision making process
Slow

Decentralization Makes Planning and Coordination

Difficult
Lose control of decision making
To decide Mechanisms to control specific
employee tasks and roles

Standardization

Mutual Adjustment
Contingency Approach to Organizational Design

Design of
Environment
Structure

Fit

Effectiveness
 Thank You
and
All the Best for the Examination