Organisational Change        Chapter 2   The Nature of Change                          1
IntroductionThe chapter: Discusses a number of frameworks for categorising change. Explains why, in order to be effective,...
ObjectivesTo:     Emphasise the complex nature of organisational      change;     Describe and discuss the multi-dimensi...
Background: A definition of strategyStrategy is:    the direction and scope of an organisation over the    long term which...
Environmental turbulenceAnsoff & McDonnel (1990) (recap) – Level 1. Predictable – Level 2. Forecastable by extrapolation –...
Varieties of change (overview)   Grundy (1993)     – Smooth incremental     – Bumpy incremental     – Discontinuous   Tu...
Varieties of change (Grundy)   Smooth incremental – evolves slowly, in a    systematic and predictable way.   Bumpy incr...
Major Types of Change (Grundy)                                                                                        Disc...
Varieties of change (Tushman et al)   Converging (fine-tuning) - trying to do better    what is already being done well....
Pressures for Frame-breaking Change   Industry discontinuities, e.g. sharp changes in    the legal, political or technolo...
Examples of Frame-breaking Change           Change of mission or core            values           Power shifts, resource...
Scale of change (1) (Dunphy & Stace)1.   1. Fine Tuning.      At departmental level.      Making re-alignments to ensure...
Scale of change (2) (Dunphy & Stace)   3. Modular Transformation.     Major realignment of one or more      departments ...
Environmental conditions and types of change  ENVIRONMENTAL FORCES FOR                                       TYPES OF CHAN...
Phases of Emergent Versus              Planned Change (1)   Fine tuning and incremental    change are usually also seen a...
Phases of Emergent Versus              Planned Change (2)   However, organizations that rely    only on making emergent c...
Phases of Emergent Versus             Planned Change (3)   Some theorists argue that    PLANNED CHANGE that is also    fr...
“Logical Incrementalism” (1)   Quinn does not agree that change    is either emergent or planned.    Quinn believes that ...
“Logical Incrementalism” (2)    Quinn says that managers:     Are flexible about how to get to the      destination.    ...
Predictable Change (1)Some   theorists think that change might be neither wholly emergent nor wholly planned.Instead, ch...
Predictable Change (2)Each  of Greiner’s stages contains acrisis period. Stage 1 is entrepreneurial - survival  oriented...
Stages of organisational growth                  Phase 1                   Phase 2             Pahse 3               Phase...
Predictable Change (3)   Greiner’s model is potentially useful in    identifying what stage an organization is at,    and...
Diagnosing Change Situations   Diagnosis of change situations is not an    exact science.   Various diagnostic methods c...
Evolutionary Cycle of Competitive Behaviour - 1   Strebel has suggested a model that examines    the industry within whic...
Evolutionary Cycle of Competitive Behaviour - 2The cycle involves two main phases.1. The DIVERGENT PHASE, based on   innov...
Evolutionary Cycle of Competitive Behaviour - 32. Eventually a breakpoint occurs, as the   emphasis shifts to the CONVERGE...
Evolutionary Cycle of Competitive Behaviour - 4   Progressively, with cycle after cycle, industries    deliver both more ...
Evolutionary Cycle of Competitive Behaviour - 5   High Customer  Value                                                    ...
Evolutionary Cycle of Competitive Behaviour - 6   Spotting the breakpoints.   Formal Methods include:     Environmental...
Difficulties and ‘Messes’Difficulties.                   Messes.   These are characterised        These are characterise...
Difficult versus messy problemsDIFFICULTIES - Smaller scale, well-defined, ‘hard complexity’, multiple variables, cerebral...
Concluding Remarks Diagnosing necessary change and managing  subsequent change is usually not just a  matter of objective...
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  • Discuss with students Ill. 2.3 (p29) Stacey’s types of change environments Discuss Ansoff & McDonell’s types of environment (p27) Act Students to make table to position Ansoff & McDonnell, Stacey and Strebel’s types of environments
  • Amazon mission statement

    1. 1. Organisational Change Chapter 2 The Nature of Change 1
    2. 2. IntroductionThe 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. 2
    3. 3. ObjectivesTo:  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. 3
    4. 4. Background: A definition of strategyStrategy 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. 4
    5. 5. Environmental turbulenceAnsoff & McDonnel (1990) (recap) – Level 1. Predictable – Level 2. Forecastable by extrapolation – Level 3. Predictable threats & opportunities – Level 4. Partially predictable opportunities – Level 5. Unpredictable surprisesStrebel (1996) – Weak forces – Moderate forces – Strong forcesStacey (1996) (recap) – Close to certainty – Far from certainty 5
    6. 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 6
    7. 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. 7
    8. 8. Major Types of Change (Grundy) DiscontinuousRateof Bumpy incrementalchange Smooth incremental Time Source: Grundy, T. (1993) Implementing Strategic Change, Kogan Page, p. 25 8
    9. 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). 9
    10. 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 10
    11. 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 11
    12. 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….. 12
    13. 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. 13
    14. 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) incrementalForecastable byextrapolation Moderate Close to Converging Incremental Contained certainty (incremental) adjustmentPredictable threats Bumpyand opportunities incrementalPartially predictable Modularopportunities Strong Discontinuous transformation Discontinuous Open-ended Far from or frame- certainty breaking CorporateUnpredictable transformationsurprises 14
    15. 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. 15
    16. 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. 16
    17. 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. 17
    18. 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’. 18
    19. 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. 19
    20. 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. 20
    21. 21. Predictable Change (2)Each of Greiner’s stages contains acrisis 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. 21
    22. 22. Stages of organisational growth Phase 1 Phase 2 Pahse 3 Phase 4 Phase 5 Entrepreneurial Direction Delegation Co-ordination CollaborationStructure *Informal *Functional *Decentralized *Staff functions *Matrix-type *Centralized *Bottom up *SBUs structure *Hierarchical *Decentralized *Top down *Units merged into product groupsSystems *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 controlsStyles/ *Individualistic *Strong *Full delegation *Watchdog *Team-orientedpeople *Creative directive and autonomy *Interpersonal skills *Entrepreneurial at a premium *Ownership *Innovative *Educational biasStrengths *Fun *Efficient *High management *More efficient *Greater spontaneity *Market response motivation allocation of *Flexible and corporate and behaviourial local resources approachCrisis Point *Crisis of leadership *Crisis of *Crisis of control *Crisis of red tape ? autonomyWeaknesses *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. 22
    23. 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. 23
    24. 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. 24
    25. 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. 25
    26. 26. Evolutionary Cycle of Competitive Behaviour - 2The 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. 26
    27. 27. Evolutionary Cycle of Competitive Behaviour - 32. 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. 27
    28. 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 28
    29. 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 29
    30. 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 30
    31. 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. 31
    32. 32. Difficult versus messy problemsDIFFICULTIES - 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 32
    33. 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. 33

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