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Do organizations have to change?

Turbulent Times The Changing Work Place

• Today’s organizations need to continuously adapt to new situations if they are to survive and prosper

One of the most dramatic elements is the shift to a technology- driven workplace

Ideas, information, and relationships are becoming critically important

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From where the pressure on organization come?

The outside the world

Closer to home

Inside the organization

Organizations have to change because they are subject to pressures from the outside world, the sector, their local area, and from within

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Outside the world• Political factors- government policies and initiatives, attitudes

to industry and competition, political alignments at home and abroad.

• Economic factors- interest rates, currency exchange rates, consumer expenditure, inflation

• Social and cultural factors- where people live, education and health, social mobility, social and cultural attitudes to work, home and community life and behavior

• Technological factors- new product and services, access and availability of new technologies becoming outdated

• Legislative factors- employment law, taxation law, health and safety legislation

• Environmental factors- pollution control, water, transport and development policies, waste disposal

• -------or any combination of these.

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Closer to home

• The pool of potential customers- do they want the organization’s product and services? Can they get them cheaper or more easily elsewhere?

• Competitors-what action is the competition taking to steal the organization’s customers

• Suppliers-does the organization have a choice of suppliers and are they keen to get the organization’s business?

• Labour Market- are there enough workers with the right skills?

• Local conditions- what’s happening locally that affects the organization viability?

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Within the organization itself

• A new boss might have different styles and approach or want to take the organization in a new direction

• A new strategy may be stimulated by an analysis of external forces and may involve: providing new products and services, cutting costs, moving into new market…

• Attempts to make the organization more efficent by changing the way people work.

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What is organizational change?

Any substantive modification to some part of the organization.

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Types of change

Top down

Bottom up

Radical Gradual

Problem solving

LearningContinuous improvement

Actively seekNew job

RestructuringStrategy

Takeover, merger

DevelopmentProgramme

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Radical change• It is characterized by a major shift in the way people

work or act, perhaps requiring different values and attitudes.

• A radical change is often marked by a decision to make a distinct break from a current situation in order to reach a desired future situation. Also known as frame-breaking change.

• Change that results in a major overhaul of the organization or its component systems.

Current situation

Process of change Desired future situation

Breakpoint decisions

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Some radical change is open-ended-a change is followed by soon by another and perhaps more to come,

Current situation

Desired future situation

Breakpoint decisions

Change processes

Review/evaluate Implement

Plan change

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Top-down and bottom-up change• Top-down change is imposed by others,

usually those who in powers.• Bottom-up change is planned and let by

the people who carry it out. It is often gradual, involving small incremental changes

Gradual/Incremental change.Also known as frame-bending change.

Change that is part of the organization’s natural evolution.

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Planned Vs Reactive Changes

Planned Change: Change that is designed and implemented in an orderly and timely fashion in anticipation of future events. A performance gap is a direct response to a perceived performance gap.

• A discrepancy between the actual and desired state of affairs.

• May reflect problems or opportunities.

Reactive Changes: A place meal response to circumstances as they develop.

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Model of Change Sequence of Events

EnvironmentalForces

InternalForces

Need for change

Initiate change

Implement change

Monitor global competition, and other factors

Consider plans, goals, company problems, and needs

Evaluate problems and opportunities, define needed changes in technology products, structure, and culture

Facilitate search, creativity, idea champions, venture teams, skunk works and idea incubators

Use force field analysis, tactics for overcoming resistance

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Forces for Change

• Environmental Forces– Customers– Competitors– Technology– Economic– International arena

• Internal Forces – activities and decisions

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Need for Change

Performance gap = disparity between existing and desired performance levels.

Current procedures are not up to standard

● New idea or technology could improve current performance

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Initiating Change

• Stage where the ideas that solve perceived needs are developed

• Search = process of learning about current developments inside or outside the organization that can be used to meet the perceived need for change

• Creativity = generation of novel ideas that might meet perceived needs or offer opportunities for the organization

Critical phase of change management

Experiential Exercise: Is Your Company Creative?

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Change agents

– Individuals and groups who take responsibility for changing the existing behavior patterns of another person or social system.

– Sometimes hired as outside consultants.– Managers and leaders in contemporary

organizations are expected to be change agents.

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Idea Champion

A person who sees the need for and Champions productive change within

the organization

Change does not occur by itself

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Four Roles in Organizational Change

Inventor· Develops andunderstandstechnical aspects of ideas

· Does not know howto win support for the idea or make abusiness of it

Sponsor·High-level managerwho removesorganizational barriers·Approves andprotects idea withinorganization

Critic· Provides reality test

· Looks for short-comings

· Defines hard-nosedcriteria that ideamust pass

Sources: Based on Harold L. Angle and Andrew H. Van de Ven, “Suggestions for Managing the Innovation Journey,” in Research in the Management of Innovation: The Minnesota Studies, ed. A. H. Van de Ven, H. L. Angle, and Marshall Scott Poole (Cambridge, Mass.: Ballinger/Harper & Row, 1989); and Jay R. Galgraith, “Designing the Innovating Organization,” Organizational Dynamics (winter 1982) 5-25.

Champion· Believes in idea· Visualizes benefits· Confrontsorganizationrealities of cost, benefits

· Obtains financial &political support

· Overcomes obstacles

Championing an idea successfully requires roles in organizations

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Steps in organizational change?(or) How to Change?

Phases of planned change.- Kurt Lewin Model– Unfreezing.

• Preparing a situation for change by disconfirming existing attitudes and behaviors.

• Susceptibility to “boiled frog phenomenon.”

– Changing.• Taking action to modify a situation by altering the targets of

change.

– Refreezing.• Maintaining and eventually institutionalizing the change.

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What can be done aboutresistance to change?

Ways in which resistance is experienced.

– Resistance to the change itself.

– Resistance to the change strategy.

– Resistance to the change agent.

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What can be done aboutresistance to change?

Why people resist change.– Fear of the unknown.– Lack of good information.– Fear for loss of security.– No reason to change.– Fear for loss of power.– Lack of resources.– Bad timing.– Habit.

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Force-Field Analysis

• The process of determining which forces drive and which resist a proposed change

Restraining Forces (Barriers)

•Lack of resources

•Resistance from middle managers

•Inadequate employee skills

Driving Forces

•Thought of as problems or opportunities that provide motivation for change

Kurt Lewin

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Traditional to Just-In-Time Inventory Systems

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Areas of Organizational Change

Culture/People

Strategy

Structure

Technology Products

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Organizational Change

Technology: General rule = change is bottom up

New product:

· Horizontal linkage model emphasizes shared development of innovations among several departments

· Time-based competition is based on the ability to deliver products and services faster than competitors

Structure: Successful change = through a top-down approach

Culture/people:

· Training is the most frequently used tool for changing the organization’s mind-set

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Horizontal Linkage Model

For New Product Innovation

Research Department

Marketing Department

Manufacturing Department

New Technology

Customers Market

Conditions

Organization

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Structural Changes

• Any change in the way in which the organization is designed and managed● Hierarchy of authority● Goals● Structural characteristics● Administrative procedures● Management systems

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Culture-People Changes

• Changes in structure, technologies, and products or services do not happen on their own

• Changes in any of these areas require changes in people

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Model for Planned Organizational Change

Source: Adapted from Larry Short, “Planned Organizational Change,” MSU Business Topics, Autumn 1973,pp. 53–61 ed. Theodore Herbert, Organizational Behavior: Readings and Cases (New York: McMillan, 1976), p. 351.

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Organizational Development (OD)

An effort that is planned, organization wide, and mange from the top indented to increase organizational effectiveness and health through planned interventions in the organization’s process, using behavioural science knowledge.

Problems OD Can Address

Problems OD Can AddressProblems OD can address

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OD Techniques

• Diagnostic activities• Team building• Survey feedback• Education• Inter group activities• Third party peacemaking• Techno structural activities• Process consultation• Life and career planning• Coaching and counseling• Planning and goal setting

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What is innovation?

• Schumpeter argued that innovation comes about through new combinations made by an entrepreneur, resulting in – a new product, – a new process, – opening of new market, – new way of organizing the business – new sources of supply

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Innovation

The process of creating new ideas and putting them into practice.

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Open Innovation

• Extending the search for and commercialization of new ideas beyond the boundaries of the organization

• The boundaries between an organization and its environment are becoming porous so that ideas flow back and forth among different companies that engage in partnerships, joint ventures, licensing agreements, and other alliances

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Forms of innovation

• Radical Versus Incremental Innovation

• Technical versus Managerial Innovation

• Product versus Process Innovation

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The Innovation Process

DevelopmentOrganization evaluates, modifies,

and improves on a creative ideas

Application Organizations uses developed idea

In design, manufacturing, or delivery of

New products or services or processes

LaunchOrganization introduces

new products or services to the marketplace.

GrowthDemand for new products

or services growth

DeclineDemand for an innovation decreases, and substitute

Innovations are developed and Applied.

MaturityMost competing organizations

have access to the ideas

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“Re-Everything”

• “Re-Everything” for e-Customer Focus• “The most productive and successful

companies focus on increasing market share by staying one step ahead of the customer and coming up with brand-new product innovations that will inspire his imagination, rather than by battling for

market share in an already crowded market.”“Quality, then, means anticipating the

needs of the customer.”

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The failure to Innovate

• Lack of resources

• Failure to recognize opportunities

• Resistance to change

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Promoting innovation in organization

• The reward system

• Organizational culture

• Intrapreneurship in larger organizations.

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High Performance Work Systems Framework

By Permission: Van Buren & Werner (1996)