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Organizational Change
McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
15-2
Organizational Change at Ford
Ford Motor Co. CEO Alan
Mulally successfully
transformed the troubled
automaker by having a
compelling vision and
applying several other
organizational change
practices.
15-3
Lewin’s Force Field Analysis Model
Developed by Kurt Lewin
Driving forces
• Push organizations toward change
• External forces or leader’s vision
Restraining forces
• Resistance to change -- employee
behaviors that block the change
process
DrivingForces
RestrainingForces
15-4
Desired
Conditions
Current
Conditions
Before
Change
After
Change
Force Field Analysis Model
During
Change
DrivingForces
RestrainingForces Driving
Forces
RestrainingForces
DrivingForces
RestrainingForces
15-5
Not Hoppy About Change
Mina Ishiwatari (front left)
wanted to improve Hoppy drink’s
brand image, but most staff
resisted these changes. “I tried
to take a new marketing
approach to change the image
of Hoppy . . . but no one would
listen to me.” Ishiwatari’s
persistence improved Hoppy’s
popularity in Tokyo with limited
support or budget.
15-6
Restraining Forces(Resistance to Change)
Many forms of resistance• e.g., complaints, absenteeism,
passive noncompliance
View resistance as a
resource1. Symptoms of deeper problems
in the change process
2. A form of constructive conflict --
may improve decisions in the
change process
3. A form of voice – helps
procedural justice
15-7
1. Direct costs
• Losing something of value due to change
2. Saving face
• Not invented here syndrome
3. Fear of the unknown
• Risk of personal loss
• Concern about being unable to adjust
Why People Resist Change
15-8
4. Breaking routines
• Cost of moving away from our “comfort zones”
• Requires time/effort to learn new routines
5. Incongruent team dynamics
• Norms contrary to the desired change
6. Incongruent organizational systems
• Systems/structures reinforce status quo
• Career, reward, power, communication systems
Why People Resist Change (con’t)
15-9
Inform employees about driving forces
Most difficult when organization is doing well
Customer-driven change
• Adverse consequences for firm
• Human element energizes employees
Sometimes need to create urgency to change
without external drivers
• Requires persuasive influence
• Use positive vision rather than threats
Creating an Urgency for Change
15-10
Minimizing Resistance to Change
Highest priority and first
strategy for change
Generates urgency to change
Reduces uncertainty (fear of
unknown)
Problems -- time consuming
and costly
Communication
Learning
Involvement
Stress Mgt
Coercion
Negotiation
15-11
Minimizing Resistance to Change
Provides new knowledge/skills
Includes coaching and other
forms of learning
Helps break old routines and
adopt new roles
Problems -- potentially time
consuming and costly
Communication
Involvement
Stress Mgt
Coercion
Negotiation
Learning
15-12
Minimizing Resistance to Change
Employees participate in change
process
Helps saving face and reducing
fear of unknown
Includes task forces, future
search events
Problems -- time-consuming,
potential conflict
Learning
Involvement
Stress Mgt
Coercion
Negotiation
Involvement
Communication
15-13
Minimizing Resistance to Change
When communication, learning,
and involvement are not enough
to minimize stress
Potential benefits
• More motivation to change
• Less fear of unknown
• Fewer direct costs
Problems -- time-consuming,
expensive, doesn’t help everyone
Learning
Involvement
Coercion
Negotiation
Stress Mgt
Communication
15-14
Minimizing Resistance to Change
Influence by exchange --
reduces direct costs
May be necessary when people
clearly lose something and won’t
otherwise support change
Problems
• Expensive
• Gains compliance, not
commitment
Learning
Involvement
Stress Mgt
Coercion
Communication
Negotiation
15-15
Minimizing Resistance to Change
When all else fails
Assertive influence
Radical form of “unlearning”
Problems
• Reduces trust
• May create more subtle resistance
• Encourage politics to protect jobCoercion
Learning
Involvement
Communication
Stress Mgt
Negotiation
15-16
Refreezing the Desired Conditions
We tend to revert to previous behaviors and practices,
unless systems and structures hold (refreeze) the
desired changes.
“Even when we want to change, and do change, we tend
to relax and the rubber band snaps us back into our
comfort zones.” (Ray Davis, CEO, Umpqua Bank)
Ray Davis, Umpqua Bank
15-17
Change agent -- anyone who possesses
enough knowledge and power to guide and
facilitate the change effort
Involves transformational leadership
• Develop the change vision
• Communicate the vision
• Model the vision
• Build commitment to the vision
Change Agents
15-18
Strategic Vision & Change
Need a vision of the desired
future state
Identifies critical success
factors for change
Minimizes employee fear of
the unknown
Clarifies role perceptions
15-19
Social Networks and Viral Change
Change agents need a
guiding coalition
• Representative across the firm
• Influence leaders – respected
Viral change
• Information seeded to a few
people is transmitted to others
based on patterns of friendship
• Relies on social networks -- high
trust, referent power
• Change also occurs through
behavior observation
15-20
Begin change as pilot projects
Effective diffusion considers MARS model
• Motivation – Pilot project employees rewarded;
motivate others to adopt pilot project
• Ability – Train employees to adopt pilot project
• Role perceptions – Translate pilot project to new
situations
• Situational factors – Provide resources to implement
pilot project elsewhere
Diffusion of Change
15-21
Action orientation and research orientation
• Action – to achieve the goal of change
• Research – testing application of concepts
Action research principles
1. Open systems perspective
2. Highly participative process
3. Data-driven, problem-oriented process
Action Research Approach
15-22
Formclient-
consultantrelations
Disengageconsultant’s
services
Action Research Process
Diagnose
need for
change
Introduce
intervention
Evaluate/
stabilize
change
15-23
Frames change around positive and possible future, rather than traditional problem focus.
1. Positive principle – focus on opportunities, not problems
2. Constructionist principle – conversations shape reality
3. Simultaneity principle – inquiry and change are simultaneous
4. Poetic principle – we can choose how to perceive events and situations
5. Anticipatory principle – people are motivated by desirable visions of the future
Appreciative Inquiry Approach
15-24
Four-D Model of Appreciative Inquiry
Designing
Engaging in
dialogue
about “what
should be”
Dreaming
Forming
ideas about
“what might
be”
Discovery
Discovering
the best of
“what is
Delivering
Developing
objectives
about “what
will be”
15-25
Future search, open space, and other interventions that involve “the whole system” • Large group sessions
• May last a few days
• High involvement with minimal structure
Limitations of large group interventions• Limited opportunity to contribute
• Risk that a few people will dominate
• Focus on common ground may hide differences
• Generates high expectations about ideal future
Large Group Interventions
15-26
Highly participative social structures
Members representative across the formal
hierarchy
Sufficiently free from firm’s constraints
Develop solutions for organizational change
which are then applied back into the larger
organization
Parallel Learning Structure Approach
15-27
Cross-Cultural Concerns
• Linear and open conflict assumptions different from
values in some cultures
Ethical Concerns
• Privacy rights of individuals
• Management power
• Individuals’ self-esteem
Cross-Cultural and Ethical Concerns with Managing Change
15-28
Organizations are About People
“Take away my people, but
leave my factories, and soon
grass will grow on the factory
floors. Take away my factories,
but leave my people, and soon
we will have a new and better
factory.”
Andrew Carnegie (1835-1919)
Organizational Change
Discussion ofTeam Exercise
15.2Strategic Change Incidents
15-31
Scenario #1: “Latté Troubles”
Refers to Starbucks, which
suffered from the financial
downturn and competition,
resulting in closing 900 stores
and laying off staff.
Chairman Howard Schultz
lamented that aggressive growth
had led to “a watering down of
the Starbucks experience.”
Shultz stepped back into the
CEO role with an agenda for
change.
15-32
Starbucks’ Change Strategy
Schultz publicly apologized to
employees for “letting our people
down”; stated his commitment to
transform the company.
Sought customer feedback. Specially
trained employees (“idea partners”)
hosted conversations and act as
advocates for customers’
suggestions.
Introduced new products and quality
control processes.
Empowered employees to design
better Starbucks experience.
15-33
Scenario #2: “Greener Telco”
Scenario #2 refers to Bell
Canada’s Zero Waste
program, which successfully
changed employee behavior
by altering the causes of
those behaviors.
Pilot project in Toronto – 12
floor building of 1000 staff
reduced waste from 1800 lb
per day to just 75 lb per day
within 3 years.
Courtesy of Bell Canada
15-34
Bell Canada’s Change Strategy
Relied on the MARS model to
alter behavior:
Motivation -- employee
involvement, respected steering
committee (photo)
Ability -- taught paper reduction,
email, food disposal
Role perceptions – made waste
reduction salient (everyone’s
job) through banners, training
Situation -- created barriers to
wasteful behavior (e.g. Coffee
mugs, removed garbage bins)
Courtesy of Bell Canada
15-35
Scenario #3: “Go Forward Airline”
Scenario #3 refers to
Continental Airline’s “Go
Forward” change strategy,
which catapulted the
company “from worst to
first” within a couple of
years.
15-36
Continental Airlines’ Change Strategy
Communicate, communicate, communicate
Introduced 15 performance measures
Established stretch goals (repainting planes in 6 months)
Replaced 50 of 61 executives
Rewarded new goals (on-time arrival, stock price)
Customers as drivers of change
