This document discusses frameworks for categorizing organizational change and the nature of change. It describes change as existing on a spectrum from smooth and incremental to discontinuous. Change can be planned and emergent, and organizations may go through predictable life cycle stages of growth involving crisis periods. Understanding the type and nature of change is necessary to effectively manage and implement change within an organization.

1. Organisational Change
Chapter 2
The Nature of Change
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2. Introduction
The chapter:
Discusses a number of frameworks for
categorising change.
Explains why, in order to be effective, it
is necessary to understand the
differences between various types of
change.
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3. Objectives
To:
 Emphasise the complex nature of organisational
change;
 Describe and discuss the multi-dimensional
nature of organisational change;
 Analyse change situations in order to choose
appropriate methods of managing and
implementing change;
 Recognise that there are limitations to the
‘common-sense’ approach to managing change
that assumes that change can be planned as a
logical. Step by step, sequence of activities.
 This because of cultural, political and
leadership dynamics.
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4. Background: A definition of strategy
Strategy is:
the direction and scope of an organisation over the
long term which achieves advantage for the
organisation through its configuration of resources
within a changing environment to meet the needs
of markets and to fulfill stakeholder expectations.
Source: Johnson, G. & Scholes, K. (1993) Exploring Corporate Strategy, London, Prentice Hall, p. 10.
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5. Environmental turbulence
Ansoff & McDonnel (1990) (recap)
– Level 1. Predictable
– Level 2. Forecastable by extrapolation
– Level 3. Predictable threats & opportunities
– Level 4. Partially predictable opportunities
– Level 5. Unpredictable surprises
Strebel (1996)
– Weak forces
– Moderate forces
– Strong forces
Stacey (1996) (recap)
– Close to certainty
– Far from certainty
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6. Varieties of change (overview)
 Grundy (1993)
– Smooth incremental
– Bumpy incremental
– Discontinuous
 Tushman et al (1986)
– Converging (fine-tuning)
– Converging (incremental)
– Discontinuous or frame-breaking
 Dunphy & Stace (1993)
– Fine tuning
– Incremental adjustment
– Modular transformation
– Corporate transformation
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7. Varieties of change (Grundy)
 Smooth incremental – evolves slowly, in a
systematic and predictable way.
 Bumpy incremental – periods of relative quiet
interrupted by sudden bursts in the rate of
change (e.g. re-organisations).
 Discontinuous – ‘divergent breakpoint’,
changes involving crisis, breakthrough,
response to high turbulence.
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8. Major Types of Change (Grundy)
Discontinuous
Rate
of Bumpy incremental
change
Smooth incremental
Time
Source: Grundy, T. (1993) Implementing Strategic Change, Kogan Page, p. 25
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9. Varieties of change (Tushman et al)
 Converging (fine-tuning) - trying to do better
what is already being done well.
 Converging (incremental adaptation) - small
changes in response to small shifts in the
environment.
 Discontinuous or frame-breaking – major,
rapid (spread over 18-24 months) and
revolutionary changes in strategy, structure,
people & processes in order to meet radically
new or different circumstances. Also termed
‘upheaval.’
 Most organisations follow a pattern of
convergence/upheaval cycles. This pattern can
apply at all levels (department, unit, corporation).
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10. Pressures for Frame-breaking Change
 Industry discontinuities, e.g. sharp changes in
the legal, political or technological conditions
which shift the basis of competition
 Product life-cycle shifts, i.e. strategic change
to fit the next stage of the cycle
 Internal dynamics, e.g. new management
team, with different strategy preferences
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11. Examples of Frame-breaking Change
 Change of mission or core
values
 Power shifts, resource re-
allocation
 Total reorganization
 New workflow procedures
 New CEO coming from
outside
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12. Scale of change (1) (Dunphy & Stace)
1. 1. Fine Tuning.
 At departmental level.
 Making re-alignments to ensure that
there is a match between strategy,
structure, people and processes.
1. 2. Incremental Adjustment.
 Bit by bit changes to match the
changing environment.
 Minor modifications to strategies or
structures…..
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13. Scale of change (2) (Dunphy & Stace)
 3. Modular Transformation.
 Major realignment of one or more
departments or divisions.
 Downsizing, re-engineering.
 4. Corporate Transformation
(frame-breaking effecting the whole
organisation).
 As described earlier as discontinuous or
frame-breaking change.
A contemporary research study found that
most organisations have been undergoing
types 3 & 4 change.
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14. Environmental conditions and types of change
ENVIRONMENTAL FORCES FOR TYPES OF CHANGE
CHANGE
Ansoff and Strebel Stacey Tushman et al. Dunphy & Grundy Stacey
McDonnell (1990) (1996) (1996) (1988) Stace (1993) (1993) (1996)
Predictable Weak Close to Converging Fine-tuning Smooth Closed
certainty (fine-tuning) incremental
Forecastable by
extrapolation
Moderate Close to Converging Incremental Contained
certainty (incremental) adjustment
Predictable threats Bumpy
and opportunities incremental
Partially predictable Modular
opportunities Strong Discontinuous transformation Discontinuous Open-ended
Far from or frame-
certainty breaking Corporate
Unpredictable transformation
surprises
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15. Phases of Emergent Versus
Planned Change (1)
 Fine tuning and incremental
change are usually also seen as
emergent, ‘unfolding as it
happens’.
 The organisation, an open system,
engages ‘naturally’ in emergent
change as it tries to maintain
equilibrium with its changing
environment.
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16. Phases of Emergent Versus
Planned Change (2)
 However, organizations that rely
only on making emergent change
may ignore ‘warning signs’ of the
need for more radical forms of
change, and the organisation will
suffer ‘strategic drift’, i.e. the
strategy and perceptions of the
organisation will become less and
less in tune with the environment.
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17. Phases of Emergent Versus
Planned Change (3)
 Some theorists argue that
PLANNED CHANGE that is also
frame-breaking may then be
necessary as a drastic remedy to
bring the organization back to
health.
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18. “Logical Incrementalism” (1)
 Quinn does not agree that change
is either emergent or planned.
Quinn believes that although
managers may have an idea of
the destination, they do not really
plan change in ‘big chunks’.
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19. “Logical Incrementalism” (2)
 Quinn says that managers:
 Are flexible about how to get to the
destination.
 Arrive at strategic change through
negotiation with stakeholders.
 Allow strategic change to evolve
incrementally, although this is not piece-meal
or haphazard because it is based on agreed
purposes and involves constant critical re-
assessment.
 The planned change process involves
opportunist learning as it goes along.
 Logical instrumentalism is both emergent and
planned.
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20. Predictable Change (1)
Some theorists think that change
might be neither wholly emergent nor
wholly planned.
Instead, change may reflect the
organisation’s LIFE-CYCLE.
Greiner identifies 4 stages or 5
phases through which organisations
go as they grow and develop.
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21. Predictable Change (2)
Each of Greiner’s stages contains a
crisis period.
Stage 1 is entrepreneurial - survival
oriented.
Stage 2 is collective - based on division
of labour.
Stage 3 is formalised- based on
bureaucracy.
Stage 4 is elaborated - based on
problem oriented teams.
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22. Stages of organisational growth
Phase 1 Phase 2 Pahse 3 Phase 4 Phase 5
Entrepreneurial Direction Delegation Co-ordination Collaboration
Structure *Informal *Functional *Decentralized *Staff functions *Matrix-type
*Centralized *Bottom up *SBUs structure
*Hierarchical *Decentralized
*Top down *Units merged
into product
groups
Systems *Immediate response *Standards *Profit centres *Formal planning *Simplified and
to customer *Cost centres *Bonuses procedures integrated
feedback *Budget *Management by *Investment information systems
*Salary exception centres
systems *Tight
expenditure
controls
Styles/ *Individualistic *Strong *Full delegation *Watchdog *Team-oriented
people *Creative directive and autonomy *Interpersonal skills
*Entrepreneurial at a premium
*Ownership *Innovative
*Educational bias
Strengths *Fun *Efficient *High management *More efficient *Greater spontaneity
*Market response motivation allocation of *Flexible and
corporate and behaviourial
local resources approach
Crisis Point *Crisis of leadership *Crisis of *Crisis of control *Crisis of red tape ?
autonomy
Weaknesses *Founder often *Unsujited to *Top managers *Bureaucratic *psychological
empermentally diversity lose control as divisions between saturation
unsuited to *Cumbersome freeom breeds line/ staff,
managing *Hierarchical parochial attitudes headquarters/field
*Boss overload *Doesn’t grow , etc
people
Source: Clarke, L. (1994) The Essence of Change, Prentice Hall, p.12.
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23. Predictable Change (3)
 Greiner’s model is potentially useful in
identifying what stage an organization is at,
and therefore what type of change situation it
is in and will be in.
 The model may therefore help an organisation
to plan change and predict the next crisis
point.
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24. Diagnosing Change Situations
 Diagnosis of change situations is not an
exact science.
 Various diagnostic methods can be used
in combination, e.g. SWOT, PETS, multi-
cause diagrams.
 Some more methods are now discussed.
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25. Evolutionary Cycle of Competitive Behaviour - 1
 Strebel has suggested a model that examines
the industry within which the organisation is
located, i.e. the organisation’s competitive
environment.
 Two key concepts are:
 the ‘evolutionary cycle of competitive behaviour.’
 ‘breakpoints’, when companies must change their
strategies in response to changes in competitors’
behaviour.
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26. Evolutionary Cycle of Competitive Behaviour - 2
The cycle involves two main phases.
1. The DIVERGENT PHASE, based on
innovation/variety: beginning when
one organisation discovers a new
business opportunity, the industry as a
whole strives to create differentiated
products and services that add
customer value.
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27. Evolutionary Cycle of Competitive Behaviour - 3
2. Eventually a breakpoint occurs, as the
emphasis shifts to the CONVERGENT
PHASE, based on efficiency/survival,
which begins with imitation of
competitors’ best features, and then
leads to an emphasis on reducing
costs. Competitors converge on total
quality management, continual
improvement & re-engineering to cut
costs and maintain market share. Only
the fittest survive.
3. Then back to 1, as further savings are
marginal.
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28. Evolutionary Cycle of Competitive Behaviour - 4
 Progressively, with cycle after cycle, industries
deliver both more customer value through
various generations of differentiation (e.g.
mobile phone technology) each followed by
more cost reduction.
 Industries vary according to the relative emphasis on
divergent phases versus convergent phases
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29. Evolutionary Cycle of Competitive Behaviour - 5
High
Customer
Value
new
generation
of products
cost reduction phase
Concern for
∗ ∗
Innovation &
customer value differentiation
phase
cost reduction phase
∗ ∗ ∗ = breakpoints
pioneering/
Low novelty
Customer phase
Value
High Delivery of efficiency & cost savings Low
Costs Costs
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30. Evolutionary Cycle of Competitive Behaviour - 6
 Spotting the breakpoints.
 Formal Methods include:
 Environmental scanning
 Benchmarking
 Monitoring, data collection and data interpretation
 Detecting when a new divergent phase is about to begin
is more difficult because the new wave of innovation
cannot yet be seen.
 Informal methods include:
 Open-minded attitudes
 Cooperation across the organisation
 Culture supporting innovation and change
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31. Difficulties and ‘Messes’
Difficulties. Messes.
 These are characterised  These are characterised by
by ‘hard complexity’. soft complexity.
 People’s description of
 There are lots of factors
events is ambiguous.
and variables.
 There are multiple
 But they can be interpretations and
meaningfully quantified. reconstructions of what the
 Optimal solutions can be problem is.
developed.  Stakeholder groups will see
things according to their
stake in the problem.
 Thus there are many
different ideas about what
kind of solutions there
might be.
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32. Difficult versus messy problems
DIFFICULTIES - Smaller scale, well-defined, ‘hard complexity’, multiple variables, cerebral
know what limited priorities
would be a timescale clear
solution
know what limited
the problem is
BOUNDED applications
know what limited can be treated
needs to be number of as a separate
known people involved matter
_______________________________________________________________________________________________________________________________
_
MESSY PROBLEMS - bigger, poorly defined, ‘soft complexity’, multiple perspectives, emotional
longer uncertain
no solutions timescale priorities called
into question
uncertain
but greater
know what UNBOUNDED implications;
the problem is worrying
can’t be
don’t know what more people disentangled
needs to be known involved from its context
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33. Concluding Remarks
 Diagnosing necessary change and managing
subsequent change is usually not just a
matter of objective calculation.
 Soft problems present various emotional and
social dimensions which demand a broad
range of managerial change competencies
and approaches.
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