Change Management Lecture 4 What changes in organizations

Change Management Lecture 4 What changes in organizations

Scale of Change • Not all change is the same magnitude • First-order change: § Incremental § They maintain and develop the organization § E. g. continuous and smaller changes to the structure of an organisation • Second-order change: § Transformational § Fundamentally changes the way an organization functions § E. g. downsizing

Between First and Second Order Change • Mid-range changes § Overcomes inertia but is not revolutionary § Avoids the alarming (high stress) implications of large scale change § “tectonic change” • Destroy outdated elements but keep the good ones • Punctuated equilibrium § Long periods of stability followed by short bursts of change and instability

Nadler and Tushman Incremental Discontinuous Anticipatory Tuning Reorientation (frame bending) Reactive Adaptation Re-creation (frame breaking)

Latent energy • According to Frohman, not enough attention has been paid to the overall impact on organizations of small-scale changes and the role of personal initiatives • Technological leads are short-lived • What is most important is people who are able to identify relevant, innovative (local) organizational changes • Managers tend to want to go for the Big Bang theory of change and ignore front line performers • Vaill calls this unlocking the ‘latent energy’ of the organization

Local routines • Feldman § Routines are continuously changing b/c: • Past outcomes fall short of aspiration levels • Performance exceeds aspiration levels • Different people place their own interpretations and actions on how a routine should occur • Therefore, routines evolve over time and are not stable and rigid but flexible • Do we buy this argument? What are the implications?

Coping with hyper-competition • Strategies § § § § Delayering Networks/alliances Outsourcing Disaggregation Empowerment Flexible work groups Short-term staffing Reduction of internal and external boundaries • Questions § How prevalent are these practices? § Are some practices more prevalent than others? § Are old routines replaced, modified or co-exist?

Downsizing • Key points § Common – millions downsized every year § Does not necessarily lead to increased productivity (2 in every 3 cases) § Can be an excessively costly exercise ($7 K per $30 K employee) • Key challenges: § employee retention, survivor syndrome, communication, due diligence, cultural adjustment

Technological change There a variety of new technologies being used, for example: § CRM, ERP, RFIDs, BPR, Six Sigma • Key challenges § Piloting, integration, timing, technology choice, communication, training,

Mergers and acquisitions • Key points § Many rationales for acquisitions § Usually to achieve growth and/or synergy • Key challenges § Cost savings, cultural adjustment, due diligence, employee retention, power structure, communication

Questions • How do you approach the paradox of change? § Is the risk of failing less risky than not changing? Is this a good assumption for all changes that you undertake? What criteria can you develop to assess this balance? • Traditional organizational practices § When should they be replaced? Retained? Modified? § Are you more open to transformational or incremental change? Why? § How aware have you been to sense-making routines? How might knowledge of sense-making assist you?

Nestle Case • List examples of first and second order change in the Nestle case. § B-L emphasizes the need for incremental change – is this what he has done? § Explore the differences and similarities between his views about change and yours