Chapter 2 - The nature of organizational change

3 commonly analyzed change events by Beck et al. (2008)

- Change of markets (finding new groups of customers and/or new products/services) - Change of organizational leadership - Changes to rules and routines that comprise the basic structure of organizations

Wilson and planned change (1992)

- argues that planned change is a management concept - view does not take account for the context in which change must take place

Indicators for Convergence

- competitors (visible in increasingly similar products) - customer (when differentiation between offerings look artificial) - Distributor (play competitors against each other) - supplier (cannot provide source of advantage anymore)

Contemporary discourse of change

- continuous organizational change - improving already positive situation - constructing ongoing dialogues (less hard data) - less tangible areas also targeted - involvement of all people at all levels - debating what works

Types of change

- convergent - planned - evolutionary - revolutionary - radical - emergent

Indicators for Divergence

- customer (saturated market and declining growth rates) - new entrants (restless customers attract them) - competitors (might need to look for innovations due to declining returns) - suppliers (new resources and tech) - distributor (when they lag behind due to adaptation time)

Traditional discourse of change

- discrete beginning and end points - focusing on negative events - analysing data - tangible features - driven by top and middle management - top-down

Examples of incremental adjustment (D&S)

- expanding sales territory - shifting the emphasis among products and services - improved production processes - articulating a modified mission statement to employees - adjustments to organizational structures within or across divisional boundaries to achieve better links in product/service delivery

4 steps of planning change

- exploration - planning - action - integration

Need for frame-breaking change

- industry discontinuities - product lifecycle shifts - internal company dynamics

Messes

- larger-scale with worrying implications for all concerned - interrelated complex of problems - people of different persuasions involved - subjective - at best semi-quantifiable objectives - absence of knowledge of factors - little agreement - usually have been around for some time - not to be solved quickly - fuzzy timescales - spread throughout the organization

Examples of modular transformation (D&S)

- major restructuring of particular departments/divisions - changes in key executives and managerial appointments - work and productivity studies resulting in significantly reduced or increased workforce numbers - reformed departmental/divisional goals - introduction of significantly new process technologies affecting key departments or divisions

Fine-tuning in Dunphy and Stace's typology (1993)

- organizational change is an ongoing process - adjustments of the fit between organization's strategy, structure, people and processes - occurs at departmental/ divisional levels

Examples of fine-tuning (D&S)

- refining policies, methods and procedures - creating specialist units and linking mechanisms to raise output and better focus on quality and cost - developing personnel better suited to the present strategy (improved training and development) - creating/improving individual and group commitment to the company mission and one's own department - promoting confidence in the accepted norms, beliefs and myths

Features of frame-breaking change

- reformed mission and core values - altered power status - reorganization - revised interaction patterns - new executives

Examples of corporate transformation (D&S)

- reformed organizational mission and core values - altered power and status affecting the distribution of power in the organization - reorganization - major changes in structures, systems and procedures across the organization - revised interaction patterns - new procedures, workflows, communication networks and decision-making patterns across the organization - new executives in key managerial positions appointed from outside the organization

Grundy's three varieties of change (1993)

- smooth incremental change - bumpy incremental change - discontinuous change ! not empirically based

Diagnosing change situations

- stakeholder analysis - SWOT - PEST - multiple-cause diagrams

Cultural artefacts

- symbols - behaviours - myths - rituals

Difficulties

- tend to be smaller-scale with less serious implications - are considered in relative isolation - have clear priorities - have quantifiable objectives - systems/technical orientation - involve few people - facts are known - agreement on problem - tend to have solutions - known timescale - minimal interactions with the environment

Stacey's summary of Quinn's logical incrementalism (2011)

- the destination is intended - the route is not intended but flexible - strategy emerges from interactions between different groups with different power - strategy evolves in small incremental steps Result: An organization that is feeling its way towards a known goal.

Plowman's categories differ in...

- the driver of change - the form of the change - the nature of the change - types of feedback - types of connections in the system

Reasons for frame-breaking change

- to create synergy - to overcome pockets of resistance - to leverage a pent-up need for change - to control risk and uncertainty

Plowman's four quadrants

1 continuous and convergent 2 episodic and convergent 3 episodic and radical 4 continuous and radical

Greiner's typical lifecycle pattern (1972)

1. the entrepreneurial stage 2. the collective stage 3. the formalization stage 4. the elaboration stage

Complexity theory

A set of ideas stemming from the study of natural systems. It sees organizations as highly complex entities where a natural order comes to exist through the process of self-organization where some form of overall order arises out of local interactions between the components of an initially disordered system.

Form of change

Adaptation or replacement.

Implication of complexity theory

Any type of change can happen at any time, whether planned or not, with unpredictable results.

Evolutionary change

As its name suggests, this is slow adaptation of existing systems or structures. Also termed continuous change. Although small in nature, changes are not trivial and are cumulative. They can trigger radical change.

Change leads to more change

Assumption that the more an organization changes things the more it learns about how to do it successfully and will feel motivated to continue doing so. Alternative: Change is aimed at improving things, if it works there should be less need to change after change has been made.

Radical change

Breaking away from a position such that a very different position is reached. Organizations or parts of them can be seen as being transformed from one template or blueprint to another. Also known as frame-bending or frame-breaking.

Bumpy incremental change

Change characterized by periods of relative tranquillity punctuated by acceleration in the pace of change. Triggers for this type of change are from both the environment and internal initiatives.

Ripple effect

Change in one factor or variable extends throughout the organization.

Smooth incremental change

Change that evolves slowly in a systematic and predictable way. Reminiscent of developed economies from the 1950s to early 1970.

Discontinuous change

Change which is marked by rapid shifts in strategy, structure or culture, or in all three.

Tushman et al.'s double-edged sword of converging periods of change.

Converging change contribute significantly to success of organizations. However, managers and employees can become so comfortable with what they do and what they believe is right and important that they become impervious to warning signs.

Fine-tuning

Converging change that aims at doing better what is already done well.

Incremental adaptation

Converging change that involves small changes in response to minor shifts in the environment.

Quinn and planned change (1980)

Criticism of the idea of planned change as something that is deliberately and carefully thought through and then implemented. Most strategic decisions are made in spite of formal planning systems rather than because of them.

Planned change

Deliberate actions designed to move an organization or part of one from one state to another and having discrete beginning and end points. Change is seen as something that managers can control.

Johnson's organization paradigm

Description of the core set of beliefs and assumptions that are commonly and widely held by the managers of an organization and which influence how information is interpreted and decision are made. - includes assumptions about the organizational environment and how it should be interpreted - it is surrounded and protected by layers of cultural artefacts which make it legitimate - organizations may fail to see need for change because of the way information is filtered -> frame-breaking or revolutionary change becomes necessary

Problems defined by Ackoff (1993)

Difficulties and messes. Messes are not just bigger than difficulties, they are qualitatively different.

Tushman et al. & Dunphy and Stace

Dunphy and Stace go further than Tushman and split frame-breaking change into modular transformation and corporate transformation. Detailing more clearly the different levels at which frame-breaking change takes place.

Grundy & Dunphy and Stace

Dunphy and Stace's scale types 1 and 2 are typical of Grundy's concept of smooth incremental change, while their scale types 3 is reminiscent of Grundy's bumpy incremental and type 4 of his discontinuous types of change.

Nature of change

Emergent or intended.

Plowman et al.'s argument

Existing theories of episodic or continuous change do not explain how small changes escalate and become radical.

Revolutionary change

Fast-paced and affecting all or most of an organization at the same time. Typically a planned move from one strategy and/or structure to another. It incorporates the idea of episodic change which is intentional but is infrequent, not continuous.

Reformed mission and core values

Features of frame-breaking change. Adjustment of values to fit and support new strategies.

Revised interaction patterns

Features of frame-breaking change. New procedures, workflows, communication networks, decision-making patterns.

Reorganization

Features of frame-breaking change. New strategy requires a modification in structure, systems and procedures, change of organization form.

Altered power and status

Features of frame-breaking change. Reflecting shifts in the power and status that different groups have in the new era.

New executives

Features of frame-breaking change. Usually from outside the organization, they have no loyalty to the 'old ways'. A small number of symbolic people changes signals a new order.

continuous and convergent

First quadrant in Plowman's four types of change. Change which happens slowly and which is channelled into improving systems and practices. Change happens within an organizational template; the template itself is not altered. Driver: Minor system instability Form: Small adaptations within an existing framework. Nature: emergent and local as people improvise and learn Feedback: positive, encouraging deviations and adaptations Connections: loose coupling which helps local conditions from amplifying

Continuous and radical

Fourth quadrant in Plowman's four types of change. Change arises out of an accumulation of small changes that gather momentum and lead to a new template being formed. If successful the new template becomes established and is reinforced by new rules, values, and norms. Driver: Major system instability Form: frame-bending adaptations Nature: emergent and system-wide as adaptations accumulate into patterns Feedback: positive and negative feedback which pulls in two directions Connections: tight adaptations to amplify into radical change

Problems defined by Paton and McCalman (2000)

Hard and soft problems.

Emergent change

If the organization is seen as an evolving system then change arises out of experimentation and adaptation. Change is seen as something that managers create the right climate for. - has been linked with concept of organizations as open systems - organizations are striving to maintain equilibrium - constantly sensing its environment

Driver of change

Instability or inertia.

Types of connections in the system

Loose or tight.

Key lesson from Jian case (2007, miscommunication from management to staff)

Managers need to appreciate the meaning of change as seen by employees. They need to help employees make sense of change and help translate new ways of doing things into everyday practice.

Greiner's organizational lifecycle model (1972)

Model that has been used to describe the stages organizations go through as they grow and develop. As organizations mature and grow in size their activities go through five phases. Each of these growth periods goes through a shorter-lived crisis period moving on to the next growth period. It is useful for identifying an organization's situation and providing warnings of the next crisis point thus helping to legitimize the need for change.

Strebel's evolutionary cycle of competitive behaviour

Model that introduces the idea of breakpoints as a reaction of organizations to competitive behaviour. Very useful in explaining the external environment in which organizations operate.

Internal company dynamics

Need for frame-breaking change. As organizations grow beyond the organization built around the founding entrepreneur they give way to more bureaucratic management and revised organization structure.

Product lifecycle shifts

Need for frame-breaking change. Over the lifecycle of a product different competitive strategies are required.

Industry discontinuities

Need for frame-breaking change. Sharp changes that shift the basis of competition: - deregulation - privatization - technologies that replace products - legal shifts

Types of feedback

Negative feedback discourages deviations from the organization's current position whereas positive feedback encourages deviation.

Burke-Litwin model (1992)

Not a model to identify causes of change but usefully draws together the array of variables that come into play when a change is triggered. Contain 12 interrelated factors. Highlights the ripple effect. Not all variables have the same weight.

The collective stage

One of the four stages of Greiner's lifecycle patter. Departments and functions begin to be defined and the division of labour is the dominant theme.

The formalization stage

One of the four stages of Greiner's lifecycle patter. Systems of communication and control become formal (bureaucracy).

The entrepreneurial stage

One of the four stages of Greiner's lifecycle patter. The primary task is to provide a service or make a product. Survival is the key strategy.

The elaboration stage

One of the four stages of Greiner's lifecycle patter. The stage of strategic change where the organization might have reached a growth plateau.

Plowman's four types of change (2007)

Organizational change can be mapped in terms of its pace (continuous or episodic) and its scope (convergent or radical).

Modular transformation in Dunphy and Stace's typology (1993)

Organizational change is characterized by major realignment of one or more departments/divisions where radical change is focused rather than on the organization as a whole.

Corporate transformation in Dunphy and Stace's typology (1993)

Organizational change is corporation-wide, characterized by radical shifts in business strategy and revolutionary changes throughout the whole organization.

change agent

Person or group that tries to alter human behaviour and/or organizational systems.

Growth through creativity

Phase 1 of Greiner's organizational lifecycle model. Structure: - informal Systems: - immediate response to customer feedback Styles/people: - individualistic - creative - entrepreneurial - ownership Strengths: - fun - market response Crisis point: Crisis of leadership Weaknesses: - founder often temperamentally unsuited to managing - boss overload

Growth through direction

Phase 2 of Greiner's organizational lifecycle model. Structure: - functional - centralized - hierarchical - top down Systems: - standards - cost centres - budget - salary systems Styles/people: - strong directive Strengths: - efficient Crisis point: Crisis of autonomy Weaknesses: - unsuited to diversity - cumbersome - hierarchical - does not grow people

Growth through delegation

Phase 3 of Greiner's organizational lifecycle model. Structure: - decentralized - bottom up Systems: - profit centres - bonuses - management by exception Styles/people: - full delegation of autonomy Strengths: - high management motivation Crisis point: Crisis of control Weaknesses: - top managers lose control as freedom breeds parochial attitudes

Growth through coordination

Phase 4 of Greiner's organizational lifecycle model. Structure: - staff functions - strategic business units (SBUs) - decentralized - units merged into product groups Systems: - formal planning procedures - investment centres - tight expenditure Styles/people: - watchdog Strengths: - more efficient allocation of corporate and local resources Crisis point: Crisis of red tape Weaknesses: - bureaucratic divisions between line/staff, headquarters/field, etc.

Growth through collaboration

Phase 5 of Greiner's organizational lifecycle model. Structure: - matrix-type structure Systems: - simplified and integrated information systems Style/people: - team oriented - interpersonal skills at a premium - innovative - educational bias Strengths: - greater spontaneity - flexible and behavioural approach Crisis point: ? Weaknesses: - psychological saturation

To create synergy

Reason for frame-breaking change. From new people in new roles and new departments.

To control risk and uncertainty

Reason for frame-breaking change. The longer the implementation period, the greater the period of uncertainty and instability, the quicker it is over, the sooner stability returns.

To leverage a pent-up need for change

Reason for frame-breaking change. When old constraints are relaxed or swept away change can become fashionable.

To overcome pockets of resistance

Reason for frame-breaking change. Which are more likely to develop if change is implemented slowly.

Episodic and convergent

Second quadrant in Plowman's four types of change. Change occurs more quickly and perhaps as a result of a specific shock or crisis. Negative feedback pushes minor changes and keeps the template in shape. Driver: Minor inertia Form: Minor replacement within an existing frame Nature: intended and local Feedback: negative, highlighting the need for minor replacement Connections: loose coupling which requires local minor replacements

Incremental adjustment in Dunphy and Stace's typology (1993)

Such change involves distinct modifications (but not radical change) to corporate business strategies, structures and management processes.

Balogun and Hope Hailey's identification of paths (2008)

Suggestion of four types of change mapped on two dimensions: - scope (incremental or big-bang) - scale (realignment or transformation)

Tushman et al.'s model of organizational life (1988)

Suggestion of two types of converging change: - fine-tuning - incremental adaptation Both have the aim of maintaining the fit between organizational strategy, structure and processes. + frame-breaking change ! based more on research than Grundy

Complicated systems

Systems that can have very many elements and interactions between them, theoretically, they can all be known.

Paton and McCalman's TROPICS test (2000)

Test that helps to locate a change situation on a continuum from hard to soft. Can only be a guide to the nature of the problem.

Dunphy and Stace's typology (1993)

The benefit of this model is in the detailed descriptions of each scale type and its testing (although only in 13 firms from one sector). Scale type 1: Fine-tuning Scale type 2: Incremental adjustment Scale type 3: Modular transformation Scale type 4: Corporate transformation

Episodic and radical

Third quadrant in Plowman's four types of change. Change happens quickly in response to a major shock or crisis. The template is altered through, for instance, a new top management team or new strategy. Driver: Major inertia Form: dramatic frame-bending replacement Nature: intended and system-wide Feedback: negative, highlighting need for major replacement Connections: tight coupling which requires system-wide radical replacement

Convergent change

This is fine-tuning of an existing configuration. The organizational configuration or template is not changed.

Unintended consequences of planned change

Those things that would not have happened if an actor had acted differently and are not what the actor had intended.