An Experiential Approach to Organization Development 7 th edition Chapter 15 Slide 1 Chapter 15 Organization Transformation and Strategic Change

An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 1

Chapter 15Chapter 15

Organization

Transformation and

Strategic Change


Learning Objectives (part 1 of 2)

Identify and define organization

transformation in relation to change process.

Understand basic strategy-culture matrix and

other approaches to changing culture to fit

the strategy.


Learning Objectives (part 2 of 2)

Recognize importance of corporate culture

and its relation to strategy.

Experience these concepts in management

simulation.


The Revolution at Home Depot that Left Some Behind (part 1 of 2)

Home Depot is number-one home-improvement

retail chain in U.S.

It had unstructured and entrepreneurial culture.

Competitor Lowe’s began taking market share.

CEO Bob Nardelli was brought in to turn around

dysfunctional culture.


The Revolution at Home Depot that Left Some Behind (part 2 of 2)

Lack of support for changes from lower levels.

Changes resulted in unintended consequences.

Nardelli brought in new top management team.

Innovation and sense of ownership declined.

HR manager said it was revolution, not

evolution.


Strategy and Transformation

Success can work against a company when it

looses touch with customers.

Radical changes may be only choice for

organization in desperate need of change.


Organizational Transformation (part 1 of 3)

Refers to drastic changes in how organization

functions and relates to its environment.

OD strategies represent more gradual

approaches to strategic change.

OT approaches are drastic and abrupt change.



OT may or may not be developmental.

OT tends to use directive, not participative,

approaches to change.

Usually top-down, top-management driven.



Requires shared vision, willingness to clean

house, restructure, tackle many problems.

OT tends to be shaped by use of power rather

than collaborative approaches.

Due to immediate threat, this may be only way

for organization to survive.


Possible Large-Scale Change Strategies

Large-scale change approaches are:

Incremental - long-term planned change.

Transformative - immediate, drastic change.


Large-Scale Change Model

Model based on 3 key dimensions:

1. Time frame of change—short or long.

2. Level of support of organizational culture.

3. Degree of discontinuity with environment.


Figure 15.1Strategies for Planned Change


Four Change Strategies (part 1 of

2)

1. Participative evolution - incremental;

anticipates change; support of culture

through collaborative means.

2. Charismatic transformation - radical change

in short time with support of culture.


Four Change Strategies (part 2 of 2)

3. Forced evolution - incremental adjustments

over longer period without support of culture.

4. Dictatorial transformation - used in times of

crisis; major restructuring running counter to

internal culture.


OD in Practice: Masters of Transformation (part 1 of 3)

Vince Lombardi, coach of Green Bay Packers,

and Jack Welch, CEO of GE, provide insight

into 2 successful change agents.


OD in Practice (part 2 of 3)

Lombardi: “We’re not just going to start with a

clean slate, we’re going to throw the old slate

away.”

Welch: “I tell people, if this place is stifling you

shake it, shake it, break it. Check the system,

because it wants to be a bureaucracy.”


OD in Practice (part 3 of 3)

Lombardi: Got rid of players, even those he

liked, when they did not perform.

Welch: “No leader enjoys making the tough

decisions. … Keeping people around who

aren’t going to grow and prosper is ‘false

kindness.’ ”


The Corporate Culture

Culture includes shared values and behaviors

formed by members of organization.

CEO and managers’ actions, not words,

produce culture.

A culture is organization’s major strength when

consistent with strategies.


Strategy-Culture Fit

Strategy:

• Course of action used to achieve objectives.

• Relates resources of organization to opportunities

in environment.

Culture:

• Set of values for setting priorities.

• Critical factor in implementation of strategy.


Definition of Culture

System of shared values held by members that

distinguishes one organization from another.


Core Characteristics of Culture

Individual autonomy.

Sensitivity to customers and employees’ needs.

Support and assistance provided by managers.

Interest in having employees initiate new ideas.

Openness of communication channels.

Risk-seeking encouraged.


Sharing the Vision

Many management theorists feel vision is

essence of leadership.

Vision involves several stages:

• Share the vision.

• Empower the individual.

• Acknowledge performance.

• Reward performance.


Figure 15.2Sharing the Vision


Strong Versus Weak Cultures

Strong culture characterized by basic values

intensely held and widely shared.

Weak culture may be seen in young company

or one with high turnover.

Culture product of key components: structure,

systems, people, and style.


Figure 15.3Relative Strength of Cultures


Strategy-Culture Matrix (part 1 of 3)

Four basic alternatives in determining strategy

changes:

1. Manage change (manageable risk)Change important and compatible with culture.

Use cultural reinforcement as strategies.



2. Reinforce culture (negligible risk)Forge vision that emphasizes shared values.

Reinforce existing culture.

3. Manage around culture (manageable risk)Change important and incompatible with present

culture.

Reinforce value system, reshuffle power, use leverage in the organization.



4. Change strategy to fit culture (unacceptable

risk)Change important but incompatible with culture.

Changing culture is explosive, long-term process that may be impossible.

Determine if strategic change is viable alternative or if strategy should be modified to fit more closely with existing culture.


Figure 15.4Strategy-Culture Matrix


Our Changing World: All the Information at Google (part 1 of 2)

Google managed by CEO Schmidt and the two

founders, Page and Brin.

Decisions made by 3-way discussions.

Engineers migrate to projects that interest them.


Our Changing World (part 2 of 2)

The VP of engineering, “We’re encouraging

creativity and tolerating chaos.”

Googles’ strategic moves set them apart from

competition.

One goal is to put all of world’s information into

Google.


Strategic Change Management

Seeks to align organization’s strategy, structure,

and human resources to fit with environment.

Organizations composed of 3 systems:

Technical Political Cultural

These systems in perpetual interaction with

environmental change and uncertainty.


Three Steps to Strategic Change

Step 1: Develop image of desired organization.

Step 2: Separate systems and intervene

separately in each one.

Step 3: Plan for reconnecting three systems.


Figure 15.5Environmental Forces and Organizational

Systems


Reasons for Large-Scale Cultural Changes

Company has strong values that do not fit

changing environment.

Industry very competitive and changes quickly.

Company mediocre or worse.

Firm about to join ranks of very largest.

Firm small but growing rapidly.


Cautions in Cultural Change

Cultural change can be difficult and time

consuming.

Culture change should be attempted only after

less-difficult solutions have been ruled out.


Key Words And Concepts

Culture - reflects organization’s past and is

rooted in firm’s history.

Incremental approach - long-term planned

change that relies on collaboration.

Organization transformation (OT) - drastic,

abrupt change to structure, management, and

culture.


Strategic change management - focuses on

alignment with strategy, structure and human

resources systems and a fit with environment.

Strategy - course of action used to achieve

major objectives.

Strategy-culture matrix - assess readiness of

culture for strategic changes.


Technical, political, and cultural systems -

Organizational systems of strategic change

management model.

Transformational change - immediate drastic

change accomplished by directive methods.

Vision - a mental image of a possible and

desirable future state of organization.


Preparations for Next Chapter

Read Chapter 16.

Complete Profile Survey and Profile Form in

Simulation 16.1, Part A, Step 1.

Complete Step 1 of OD Skills Simulation

16.2.

Documents

An Experiential Approach to Organization Development 7 th edition Chapter 15 Slide 1 Chapter 15 Organization Transformation and Strategic Change