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Chapter 3
Why
Change?:
contemporary
drivers and
pressures
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Why Change?
• Change is a risky activity – many
organizational changes fail or do not
realize their intended outcomes. This
raises the question: why is change is
so prevalent?
• Pressure to change comes from:
– External, environmental pressures
– Internal, organizational pressures
Why Change?
Images of
Managing Change
Environmental
Pressures for
Change
Why Do
Organizations Not
Change in
Response to
Environmental
Pressures
Why Do
Organizations Not
Change After
Crises?
Internal
Organizational
Change Drivers
3-2
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Images of Managing Change
Images Pressures for Change
Director Change is a result of strategic pressures and controllable by
managers’ ability to direct the organization’s response
Navigator Strategic change is in response to internal and external
pressures. Multiple pressures facing managers will need to
be taken into account.
Caretaker Managers have little control over the inevitable pressures on
the organization. Managers have little choice in the
organization’s actions.
Coach Pressures for change are constant and result in the need to
develop and shape the organization’s capabilities to better
enhance organizational outcomes.
Interpreter Pressures for change are internal and external and
managers need to understand and give meaning to these.
Nurturer Pressures for change are large and small and the manager’s
role is to enhance the adaptive capacity of the organization.
Why Change?
Images of
Managing Change
Environmental
Pressures for
Change
Why Do
Organizations Not
Change in
Response to
Environmental
Pressures
Why Do
Organizations Not
Change After
Crises?
Internal
Organizational
Change Drivers
3-3
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Environmental Pressures for Change 1
Pressure Examples Description
Fashion
pressures
Boeing
Neo-institutionalism: mimetic
isomorphism. Managers imitate
practices associated with
successful organizations
Demography
Generation
C
As population characteristics
change, so do the
nature/motivation of the workforce
and the demand for various
products/services
External
mandate
Coca-Cola
Adobe
Chevron-
Texaco
Neo-institutionalism: coercive
isomorphism. An organization
changes through formally or
informally mandated requirements
Why Change?
Images of
Managing Change
Environmental
Pressures for
Change
Why Do
Organizations Not
Change in
Response to
Environmental
Pressures
Why Do
Organizations Not
Change After
Crises?
Internal
Organizational
Change Drivers
3-4
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Environmental Pressures for Change 2
Pressure Examples Description
Globalization
and
geopolitical
developments
Exxon
Macroeconomic changes (or
crises) place pressure on
organizations to change the way
they operate.
Hyper-
competition
pressures
Dell
YouTube
Dropbox
The highly intensified rate of
business – including shortened
product life cycles and rapid
responses by competitors –
produces pressure for change at
the organizational level.
Credibility and
reputation
Mattel
Volkswagen
In light of recent corporate
governance scandals, the
pressure to maintain a good
reputation and high level of
credibility has increased.
Why Change?
Images of
Managing Change
Environmental
Pressures for
Change
Why Do
Organizations Not
Change in
Response to
Environmental
Pressures
Why Do
Organizations Not
Change After
Crises?
Internal
Organizational
Change Drivers
3-5
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Why Do Organizations Not Change in Response
to Environmental Pressures?
• Organizational learning vs. threat-rigidity
– whether external pressures facilitate or inhibit the
process of change.
• Environment as an objective entity vs. environment as
a cognitive construction
– The former treats the environment as an objective entity
to which managers must respond. The latter
emphasizes the centrality of managers’ interpretations
of environmental conditions as the key determinant of
behavior.
• Forces for change vs. forces for stability:
– External forces can vary; they either promote change or
promote stability.
• Bridging (adapting) vs buffering (shielding):
– These represent either strategies that can maintain
effectiveness by adapting parts of the organization to
changes happening in the outside environment
(bridging) or focusing on efficiency by avoiding change
through shielding parts of it from the effects of the
environment (buffering).
Why Change?
Images of
Managing Change
Environmental
Pressures for
Change
Why Do
Organizations Not
Change in
Response to
Environmental
Pressures?
Why Do
Organizations Not
Change After
Crises?
Internal
Organizational
Change Drivers
3-6
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Why Do Organizations Not Change After
Crises?
Factors may include:
• Organizational learning difficulties
• Second-order and third-order causal factors
are not understood
• Lack of a ‘psychologically safe environment’
• ‘Defensive’ agendas designed to prevent
something happening (again) can be less
appealing/rewarding than ‘innovative’
agendas focused on the development of
something new (e.g., products, markets,
systems)
Why Change?
Images of
Managing Change
Environmental
Pressures for
Change
Why Do
Organizations Not
Change in
Response to
Environmental
Pressures
Why Do
Organizations Not
Change After
Crises?
Internal
Organizational
Change Drivers
3-7
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Internal Organizational Change Drivers 1.
Pressure Examples Description
Growth
pressures
Microsoft
Existing systems and processes in
an organization may no longer be
applicable when the size of the
organization increases.
Integration
and
coordination
EDS
Integration and creating economies
of scale can lead to pressure for
change in organizations.
Corporate
Identity
Forte
Hotel
US Mint
A common organizational identity
and the unified commitment of staff
in different areas/departments of an
organization can be difficult to
manage and may encourage
change.
Why Change?
Images of
Managing Change
Environmental
Pressures for
Change
Why Do
Organizations Not
Change in
Response to
Environmental
Pressures
Why Do
Organizations Not
Change After
Crises?
Internal
Organizational
Change Drivers
3-8
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Internal Organizational Change Drivers 2.
Pressure Examples Description
New Chief
Executive
Bank of
America
Harper’s
Bazaar
Change at the senior
management level – particularly of
CEO - can often be a catalyst for
significant changes in an
organization.
Power and
politics
Morgan
Stanley
Roche
NYPD
Power relationships and
politicking can change internal
processes and decision making.
Why Change?
Images of
Managing Change
Environmental
Pressures for
Change
Why Do
Organizations Not
Change in
Response to
Environmental
Pressures
Why Do
Organizations Not
Change After
Crises?
Internal
Organizational
Change Drivers
3-9
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

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BA650 Week 3 Chapter 3 "Why Change? contemporary drivers and pressures

  • 1. Chapter 3 Why Change?: contemporary drivers and pressures Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
  • 2. Why Change? • Change is a risky activity – many organizational changes fail or do not realize their intended outcomes. This raises the question: why is change is so prevalent? • Pressure to change comes from: – External, environmental pressures – Internal, organizational pressures Why Change? Images of Managing Change Environmental Pressures for Change Why Do Organizations Not Change in Response to Environmental Pressures Why Do Organizations Not Change After Crises? Internal Organizational Change Drivers 3-2 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
  • 3. Images of Managing Change Images Pressures for Change Director Change is a result of strategic pressures and controllable by managers’ ability to direct the organization’s response Navigator Strategic change is in response to internal and external pressures. Multiple pressures facing managers will need to be taken into account. Caretaker Managers have little control over the inevitable pressures on the organization. Managers have little choice in the organization’s actions. Coach Pressures for change are constant and result in the need to develop and shape the organization’s capabilities to better enhance organizational outcomes. Interpreter Pressures for change are internal and external and managers need to understand and give meaning to these. Nurturer Pressures for change are large and small and the manager’s role is to enhance the adaptive capacity of the organization. Why Change? Images of Managing Change Environmental Pressures for Change Why Do Organizations Not Change in Response to Environmental Pressures Why Do Organizations Not Change After Crises? Internal Organizational Change Drivers 3-3 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
  • 4. Environmental Pressures for Change 1 Pressure Examples Description Fashion pressures Boeing Neo-institutionalism: mimetic isomorphism. Managers imitate practices associated with successful organizations Demography Generation C As population characteristics change, so do the nature/motivation of the workforce and the demand for various products/services External mandate Coca-Cola Adobe Chevron- Texaco Neo-institutionalism: coercive isomorphism. An organization changes through formally or informally mandated requirements Why Change? Images of Managing Change Environmental Pressures for Change Why Do Organizations Not Change in Response to Environmental Pressures Why Do Organizations Not Change After Crises? Internal Organizational Change Drivers 3-4 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
  • 5. Environmental Pressures for Change 2 Pressure Examples Description Globalization and geopolitical developments Exxon Macroeconomic changes (or crises) place pressure on organizations to change the way they operate. Hyper- competition pressures Dell YouTube Dropbox The highly intensified rate of business – including shortened product life cycles and rapid responses by competitors – produces pressure for change at the organizational level. Credibility and reputation Mattel Volkswagen In light of recent corporate governance scandals, the pressure to maintain a good reputation and high level of credibility has increased. Why Change? Images of Managing Change Environmental Pressures for Change Why Do Organizations Not Change in Response to Environmental Pressures Why Do Organizations Not Change After Crises? Internal Organizational Change Drivers 3-5 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
  • 6. Why Do Organizations Not Change in Response to Environmental Pressures? • Organizational learning vs. threat-rigidity – whether external pressures facilitate or inhibit the process of change. • Environment as an objective entity vs. environment as a cognitive construction – The former treats the environment as an objective entity to which managers must respond. The latter emphasizes the centrality of managers’ interpretations of environmental conditions as the key determinant of behavior. • Forces for change vs. forces for stability: – External forces can vary; they either promote change or promote stability. • Bridging (adapting) vs buffering (shielding): – These represent either strategies that can maintain effectiveness by adapting parts of the organization to changes happening in the outside environment (bridging) or focusing on efficiency by avoiding change through shielding parts of it from the effects of the environment (buffering). Why Change? Images of Managing Change Environmental Pressures for Change Why Do Organizations Not Change in Response to Environmental Pressures? Why Do Organizations Not Change After Crises? Internal Organizational Change Drivers 3-6 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
  • 7. Why Do Organizations Not Change After Crises? Factors may include: • Organizational learning difficulties • Second-order and third-order causal factors are not understood • Lack of a ‘psychologically safe environment’ • ‘Defensive’ agendas designed to prevent something happening (again) can be less appealing/rewarding than ‘innovative’ agendas focused on the development of something new (e.g., products, markets, systems) Why Change? Images of Managing Change Environmental Pressures for Change Why Do Organizations Not Change in Response to Environmental Pressures Why Do Organizations Not Change After Crises? Internal Organizational Change Drivers 3-7 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
  • 8. Internal Organizational Change Drivers 1. Pressure Examples Description Growth pressures Microsoft Existing systems and processes in an organization may no longer be applicable when the size of the organization increases. Integration and coordination EDS Integration and creating economies of scale can lead to pressure for change in organizations. Corporate Identity Forte Hotel US Mint A common organizational identity and the unified commitment of staff in different areas/departments of an organization can be difficult to manage and may encourage change. Why Change? Images of Managing Change Environmental Pressures for Change Why Do Organizations Not Change in Response to Environmental Pressures Why Do Organizations Not Change After Crises? Internal Organizational Change Drivers 3-8 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
  • 9. Internal Organizational Change Drivers 2. Pressure Examples Description New Chief Executive Bank of America Harper’s Bazaar Change at the senior management level – particularly of CEO - can often be a catalyst for significant changes in an organization. Power and politics Morgan Stanley Roche NYPD Power relationships and politicking can change internal processes and decision making. Why Change? Images of Managing Change Environmental Pressures for Change Why Do Organizations Not Change in Response to Environmental Pressures Why Do Organizations Not Change After Crises? Internal Organizational Change Drivers 3-9 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.