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Michael A. Hitt
C. Chet Miller
Adrienne Colella
Chapter 14 Organizational Organizational
Change and Change and DevelopmentDevelopment
Slides by Ralph R. Braithwaite
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The Evolution of StarbucksThe Evolution of Starbucks
Exploring Behavior in Action
As Starbucks grew, they realized that the informal techniques were not sufficient and needed to have a more formalized process in place. Why were these changes difficult for the organization?
Starbucks is faced with new challenges today. It has dominated the marketplace. Have they grown too fast? Will changes in the marketplace require a different approach?
What do you think the future will hold for them?
Howard Schultz
Dave Olsen
Dawn Pinaud
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Organizational Change and Organizational Change and DevelopmentDevelopment
Polaroid introduced instant photography to the market. They were one of the top 50 companies in the U.S. But they, like many others, were slow to change.
What would you have done differently if you were a senior manager at Polaroid?
Can you think of any other companies that were too slow to change and suffered the consequences?
Why is change so difficult to manage?
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Knowledge ObjectivesKnowledge Objectives1. Describe two major internal pressures for change.2. Identify and explain six major external pressures for
change3. Describe the three-phase model of planned change.4. Discuss important tactical choices involving the speed
and style of a change effort.5. Explain the four general causes of resistance to
change and the tactics that can be used to address each cause.
6. Discuss the role of the DADA syndrome in organizational change.
7. Describe the basic organization development (OD) model and discuss OD interventions, including relationship techniques and structural techniques.
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Pressures for ChangePressures for Change
Adapted from Exhibit 14-1: Internal and External Pressures for Organizational Change
IntroductionIntroduction or Removal of or Removal of Government Government RegulationsRegulations
Life-CycleLife-Cycle Forces Forces
Growing Growing International International
InterdependenceInterdependence
Changes in Changes in DemographicsDemographics
Shifting Shifting Political Political
DynamicsDynamics
Changes in Changes in Societal ValuesSocietal Values
Technological Technological AdvancesAdvances
AspirationsAspirations
Pressure for Pressure for ChangeChange
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Aspiration-Performance Aspiration-Performance DiscrepanciesDiscrepancies
• Gaps between what an individual, unit, or organization wants to achieve and what it is actually achieving.
• Three important factors in the role of aspirations
• Past aspirations
• Past performance
• Comparison with others
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Life-Cycle ForcesLife-Cycle ForcesNatural and predictable pressures that build as an organization grows and that must be addressed if the organization is to continue to grow.
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Integrative Life-Cycle ModelIntegrative Life-Cycle Model
Adapted from Exhibit 14-2: Integrative Life-Cycle Model
EntrepreneurialStage
CollectivityStage
Formalization and Control Stage
ElaborationStage
Need for additional
people
Need for stability and structure
Need for balance
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External Pressures for ChangeExternal Pressures for ChangeTechnological advances
Introduction and removal of government regulations
Changes in societal values
Shifting political dynamics
Changes in demographics
Growing international interdependence
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ManagerialAdvice
Companies’ Responses Companies’ Responses to Pressures for “Green” to Pressures for “Green”
Policies and PracticesPolicies and Practices
Are companies becoming more “green” for reasons other than the “bottom-line”? Give some examples.
What is your organization doing to become more “green”? What are you doing personally?
Should becoming “green” be a choice or is legislation needed to make it happen?
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Planned ChangePlanned ChangeA process involving deliberate efforts to move an organization or a unit from its current undesirable state to a new, more desirable state
Awakening
Mobilizing
Reinforcing
Energizing
Envisioning
Enabling
Unfreezing
Moving
Refreezing
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Process of Planned ChangeProcess of Planned Change
Adapted from Exhibit 14-3: Process of Planned Change
Unfreezing RefreezingMoving
• Provide rationale for change
• Create minor levels of guilt/anxiety about not changing
• Create sense of psychological safety concerning change
• Provide information that suspects proposed changes
• Bring about actual shifts in behavior
• Implement new evaluation systems
• Create minor levels of guilt/anxiety about not changing
• Implement new hiring and promotion systems
Kurt Lewin
14-13ExperiencingStrategic OB
Coca-Cola Is Finding a New FizzCoca-Cola Is Finding a New Fizz
Neville Isdell Sandy Douglas
Coca-Cola is changing its culture, andalso adapting its product line to bettersatisfy the demand of customers.
What are your thoughts about the steps they are taking regarding these changes?
Do you think the new innovations and changes will have a positive or a negative impact on their existing brands? Why?
What other changes would you suggest to help them remain competitive?
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Sources of FailureSources of Failure
1. Managers and associates should not expect all change activities to occur sequentially.
2. A team of change leaders, rather than a single individual, should guide an organization through a major change effort.
John Kotter
In addition to size, four factors to consider when forming change teams:
Position Power Informal Credibility
Expertise Proven Leadership
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Speed of ChangeSpeed of Change
Criteria toConsider
Urgency
Degree of support
Amount and complexity of change
Competitive environment
Knowledge and skills available
Financial and other resources
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Style of ChangeStyle of Change
Participatory – change leaders seek the ideas and advice of associates and then use many of those ideas. Criteria for evaluating the degree to which the participatory style should be used:
Non-participatory – top down, leaders design the change and plan its implementation
UrgencyUrgencyUrgencyUrgencyDegree ofDegree ofSupportSupport
Degree ofDegree ofSupportSupport
Referent andReferent andExpert PowerExpert Power
of Leadersof Leaders
Referent andReferent andExpert PowerExpert Power
of Leadersof Leaders
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Resistance to ChangeResistance to Change
Four Factors
Lack of Lack of understandingunderstanding
Different Different assessmentsassessments
Self-interestSelf-interest Low tolerance Low tolerance for changefor change
Effort to block new ways of doing things
14-18ExperiencingStrategic OB
British Airways: The Yin and British Airways: The Yin and Yang of Organizational ChangeYang of Organizational Change
Willie Walsh
Do you think there was any incentive for British Airways to change prior to deregulation?
Why do you think the changes were effective?
Given the problems faced by all the major airlines at the time, why do you think there was still so much resistance to the changes?
What other changes would you recommend at this time?
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The DADA syndromeThe DADA syndrome
Denial – ignore possible or current change
Anger – individuals facing unwanted change become angry about the change
Depression – individuals experience emotional lows
Acceptance – individuals embrace the reality of the situation and make the best of it
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Organization Development (OD)Organization Development (OD)
• Roots in humanistic psychology
• Grounded in values of individual empowerment and interpersonal cooperation
• Fully consistent with the high-involvement management approach
A planned, organization-wide, continuous process designed to improve communication, problem solving, and learning through the application of behavioral science knowledge
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Basic Organization Development Basic Organization Development ModelModel
Adapted from Exhibit 14-4: Basic Organization Development Model
Diagnosis of Diagnosis of SituationSituation
Introduction of Introduction of interventionsinterventions
Progress Progress MonitoringMonitoring
FeedbackFeedback
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Organization Development Organization Development InterventionsInterventions
OrganizationDevelopment
Structural TechniquesRelationship Techniques
T-group Training
Team Building
Survey Feedback
Job Redesign
Management by Objectives
Supplemental Organizational Processes
Adapted from Exhibit 14-5: Organization Development Interventions
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Relationship TechniquesRelationship Techniques
T-group TrainingT-group Training
Team BuildingTeam Building
Survey FeedbackSurvey Feedback
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Team Building TipsTeam Building TipsGet the right people together for a large block of uninterrupted time to work on high-priority problems or opportunities that they have identified and have them work in ways that are structured to enhance the likelihood of realistic solutions and action plans, which are then implemented enthusiastically and followed up to assess actual versus expected results.
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Structural Structural TechniquesTechniquesJob RedesignJob RedesignJob RedesignJob Redesign
Management by Management by Objectives (MBO)Objectives (MBO)Management by Management by Objectives (MBO)Objectives (MBO)
SupplementalSupplementalOrganizationalOrganizational
ProcessesProcesses
SupplementalSupplementalOrganizationalOrganizational
ProcessesProcesses
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Organizational LearningOrganizational Learning
Exploitative Learning
ExploratoryLearning
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Organization Development Organization Development Across CulturesAcross Cultures
EthnocentricAttitude andStereotyping
FlexibilityFlexibility
Knowledge ofKnowledge ofSpecific CulturesSpecific Cultures
InterpersonalInterpersonalSensitivitySensitivity
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The Strategic LensThe Strategic Lens
1. Why do organizations need to make changes on a regular basis? What are the major causes of these changes?
2. Why is it so difficult for people to change their behavior, even when they know it is important to do so?
3. If you were in a managerial position and believed that a major change in your unit’s structure was needed, what actions would you take to ensure that the change was made effectively?
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QuestionsQuestions
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