Lecture 1

• Planned alterations of organizational components to improve the effectiveness or efficiency of the organization

• Organizational components are the organizational mission, vision, values, culture, strategy, goals, structure, processes or systems, technology, and people in an organization

• When organizations enhance their effectiveness, they increase their ability to generate value for those they serve.

• organizational change is intentional and planned. Someone in the organization has taken an initiative to alter a significant organizational component. This means a shift in something relatively permanent.

Simply doing more of the same is not an organizational change. For example, increasing existing sales efforts in response to a competitor’s activities would not be classified as an organizational change

• ome organizational components, such as structures and systems, are concrete and thus easier to understand when contemplating change. For example, assembly lines can be reordered or have new technologies applied. The change is definable and the end point clear when it is done.

• When the change target is more deeply imbedded in the organization and is intangible, the change challenge is magnified. For example, a shift in organizational culture is difficult to engineer

  • Simply announcing a new strategy or vision does not mean that anything significant will change since “you need to get the vision off the walls and into the halls

Sustained behavioural change occurs when people in the organization understand, accept, and act. Through their actions, the new vision or strategy becomes real

Often, managers choose concrete tangible changes because they are easiest to plan for and can be seen. But the root cause of these issues might be managerial styles or processes—much more difficult to recognize and address. In addition, intervening through compensation may have unanticipated consequences and actually worsen the problem

• PESTEL

  • political, economic, social, technological, ecological/environmental, and legal factors that describe the environment of an organization.

Management may have systems to track the perceived quality and value of its products versus its competition’s. Benchmarking data might show that its quality is beginning to lag behind that of a key competitor. These environmental scanning and early warning systems allow for action before customers are lost or provide paths to new customers and/or new services.

• Multinational corporations, such as IBM, view workforce diversity management as a strategic tool for sustaining and growing the enterprise

• Race, gender, age, and diversity-related challenges multiply once organizations extend their footprints internationally

There is also mounting evidence of the advantages that can accrue to organizations that think about these issues proactively and align their strategies and actions with their commitment to sustainability and corporate social responsibility. Reported benefits range from increased employee commitment to positive customer reactions and improved financial performance. The reputational damage firms incur when they are found to have failed to behave responsibly can be severe

Security issues; issues related to the loss of privacy, industrial espionage, and sabotage involving both firms and government agencies have also become common

• As organizations become global, they need to clarify their own ethical standards. Not only will they need to understand the rules and regulations of each country, they will also have to determine what norms of conduct they will work to establish for their organizational members, and what constitutes acceptable and unacceptable behavior

• Also, A sudden transformation of the political landscape can trash the best-laid strategic plan.

• digitization of information

• integration of nation-states and the opening of international markets

• Geographic dispersion of the value chain.

The literature on organizational change classifies such changes into two types, episodic or discontinuous change, and continuous change. That is, change can be dramatic and sudden. Or, change can be much more gradual, such as the alteration of core competencies of an organization through training and adding key individuals

• Under dramatic or episodic change, organizations are seen as having significant inertia. Change is infrequent and discontinuous. Reengineering programs are examples of this type of change and can be viewed as planned examples of injecting significant change into an organization

• Under continuous change, organizations are seen as more emergent and selforganizing, where change is constant, evolving, and cumulative

• A second dimension of change is whether it occurs in a proactive, planned, and programmatic fashion, or reactively in response to external events. Programmatic or planned change occurs when managers anticipate events and shift their organizations as a result

• shifts in an organization’s external world lead to a reaction on the part of the organization. For example, the emergence of low-cost airlines has led to traditional carriers employing reactive strategies, such as cutting routes, costs, and service levels in an attempt to adapt.

• Tuning (incremental/continuous - Anticipatory)

  • Defined as small, relatively minor changes made on an ongoing basis in a deliberate attempt to improve the efficiency or effectiveness of the organization. Responsibility for acting on these sorts of changes typically rests with middle management. Most improvement change initiatives that grow out of existing quality-improvement programs would fall into this category.

• Adapting (incremental/continuous - reactive)

  • Is viewed as relatively minor changes made in response to external stimuli—a reaction to things observed in the environment, such as competitors’ moves or customer shifts. Relatively minor changes to customer servicing caused by reports of customer dissatisfaction or defection to a competitor provide an example of this sort of change, and once again, responsibility for such changes tends to reside within the role of middle managers.

• Redirecting or reorienting (discontinuous/radical - Anticipatory)

  • involves major, strategic change resulting from planned programs. These frame-bending shifts are designed to provide new perspectives and directions in a significant way. For example, a shift in a firm to develop a customer service organization and culture would fall in this category

• overhauling or re-creation (discontinuous/radical - reactive)

  • is the dramatic shift that occurs in reaction to major external events. Often there is a crisis situation that forces the change—thus, the emergence of low-cost carriers forced traditional airlines to re-create what they do.

• The perception of the magnitude of the change lies in the eye of the beholder. Incremental changes at the organizational level may appear disruptive and revolutionary at a department level.

• Organizational members need to learn to accept and value the perspectives of both the adaptor (those skilled in incremental change) and the innovator (those skilled in radical change). As a change agent, personal insight regarding your abilities and preferences for more modest or more radical change is critical. The secret to successful organizational growth and development over time lies in the capacity of organizational members to embrace both approaches to change at the appropriate times and to understand that they are, in fact, intertwined.

• Change is difficult, because it not always succeeds. However, doing nothing is worse

• Hamel and Prahalad argue that companies need to regenerate their strategy and reinvent their industry by building their capacity to compete. These transformations and realignments that result are sustained marathons, not quick fixes. Skilled change leaders provide a coherent vision of the change and do all that they can to help people adapt and embrace the changes with realistic expectations.

• change implementers, the ones making happen what others

• change initiators, have pushed or encouraged. Change initiators, or champions, also frame the vision for the change and/or provide resources and support for the initiative

• change recipients employees can be on the receiving end of change

• change facilitators won’t be the ones responsible for implementing the change, but they will assist initiators and implementers in the change through their contacts and consultative assistance

• Change leader or agent

  • The person who leads the change. He or she may play any or all of the initiator, implementer, or facilitator roles. Often, but not always, this person is the formal change leader. However, informal change leaders will emerge and lead change as well.

1. Managers are action oriented and assume other rational people will see the inherent wisdom in the proposed change and will learn the needed new behaviors. Or, managers assume that they will be able to replace recalcitrant employees.

2. Managers assume they have the power and influence to enact the desired changes, and they underestimate the power and influence of other stakeholders.

3. Managers look at the transition period activities as a cost, not an investment that increases the prospects for success and reduces failure risks.

4. Managers are unable to accurately estimate the resources and commitment needed to facilitate the integration of the human dimension with other aspects of the change (e.g., systems, structures, technologies).

5. Managers are unaware that their own behavior, and that of other key managers, may be sending out conflicting messages to employees and eventually customers.

6. Managers find managing human processes unsettling (even threatening) because of the potential emotionality and the difficulties they present with respect to prediction and quantification.

7. Managers simply lack the capacity (attitudes, skills, and abilities) to manage complex changes that involve people. When those managing the change get defensive, the minds of others tend to close rather than open.

8. Managers’ critical judgment is impaired due to factors related to overconfidenceand/or groupthink.

Managers must decide both How (process) to lead organizational change and What (content) to change in an organization

Managers must decide both How (process) to lead organizational change and What (content) to change in an organization

• one common cause might lie in practices that were effective in the past and that are no longer appropriate; this can be called the “failure of success.” Organizations learned what worked and what didn’t. They developed systems that exploited that knowledge and established rules, policies, procedures, and decision frameworks that capitalized on previous successes

• They developed patterned responses (habits), assumptions, attributions, and expectations that influenced the ways employees thought about how the world worked. These beliefs and ingrained responses formed a strong resistant force, which encouraged people and their organizations to maintain old patterns regardless of feedback that they were no longer appropriate. In many respects, this is where the questions of what to change and how to change intersect.

• Outlines where one should begin changing and where it becomes obvious that one needs to change

• The time to introduce change is at point B when the system is growing. The dilemma is that in the short run, the costs are likely to be greater than the benefits. It is only when the new changes are adopted and the system is working well that the outcomes’ curve turns upward again. One dilemma is that the costs of change are real and include adding people and shifting production lines, while the benefits of change are uncertain

• The costs of change appear certain and are tangible. But the benefits are uncertain and often vaguely defined. The time after point B is a time of two competing views of the future, and people will have difficulty abandoning the first curve (the one they are on) until they are convinced of the benefits of the new curve. In concrete terms, creating change at point B means convincing others about the wisdom of spending time and money now for an uncertain future return.