1 Managing Organizational Change
2 Q: What are the challenges for organizational change?An observation: Most large companies at the beginning of the 20th century disappeared by the end of the century. Why? Close-up: The case of Robin Hood Populist rebellion against excessive tax collection Rob from the rich and give to the poor Established the camping basis in Sherwood Forest
3 The organizational chart
4 Issues related to “growing pains”Increasing organizational size Resources become scarce Food supplies, finance Change of mission, identity? From confiscation to fixed transit tax Increasing competition The sheriff’s increasing threats Strategic alliance Conspiracy against Prince John? Similar patterns in other types of organizations?
5 The Five Phases of Growth Larry Greiner
6 Organization Practices During Evolution in the Five Phases of Growth
7 Organizational Change ExerciseThe overall phase (of Greiner’s five) in which I see my organization now is: In 10 months, the phase in which I anticipate my organization will be is: Which of these phases have you seen it move through? Think back on how the transitions were accomplished.
8 Issues related to organizational changeStrategic— Leadership: visions, anticipatory action strategies in timing,, initiation, coalitions & mobilization Political Vested interests—the politics of change Structural The power of organizational routines Informal networks Cultural Stability in experience, expectations Psychological contracts
9 STRATEGIES OF ORGANIZATIONAL CHNGE1. Change or Stability? 2. Change from strength or from weakness? 3. Change from top-down or from bottom-up? 4. Using existing structure or creating new structure? 5. Clear goals or ambiguous goals? 6. Focus on short-run gains or long-term goals? 7. Incremental changes or discontinuous changes?
10 Case study: 3M: The Permanently Changing OrganizationsOne of “the ten most admired corporations” — Fortune annual poll of American CEOs. The 3M model: Continuous technological innovation Institutionalized “individual entrepreneurship” Market responsiveness How is this possible—what are the challenges? Institutionalized “individual entrepreneurship”? Growth versus decentralization? Balance between structure, culture, versus change?
11 3M: A brief history Established in 1902, producing abrasives and adhesives products. Benefited from product innovation in the early days The culture of “individual entrepreneurship” The McKnight era, Organizational design for continuous changes The Lou Lehr era, Reorganization and reorientation The “Jake” Jacobson era: The orientation to competition in existing markets Main characteristics: Changes and evolution in adaptation to environments Changes in organizational attributes for innovation
12 Challenge 1: Entrepreneurship versus structureInnovation – the spirit of entrepreneurship Competition through new products Competition through new niches The dilemma between entrepreneurship and structural differentiation The 3M way: External demands and internal capabilities Decentralization: locus of decision at lower lab units; Organizational design to facilitate lateral communication The strategy of growth through new niches, rather than competition in existing markets.
13 Challenge 2: The role of organizational cultureOrganizational culture: norms, expectations, and tacit knowledge The 3M way: Innovation is the center of organizational culture Resistance to bureaucratic intervention is encouraged; Contribution to innovation is greatly respected—legends, institutional memories, ceremonies. Structure versus culture Cultural: The value of knowledge sharing Structural: Technical Council, Technical Forum, lateral interaction
14 Challenge 3: Human resource practiceThe roles of rewards and incentives The role of loyalty for 3M The 3M way: Rewards for innovation Dual track of promotion and recognition Tolerance of “well-intentioned failures”
15 Mistakes will be made, but if a person is essentially right, the mistakes he or she makes are not as serious in the long run as the mistakes management will make if it is dictatorial and undertakes to tell those under its authority exactly how they must do their job. Management that is destructively critical when mistakes are made kills initiative, and it is essential that we have many people with initiative if we are to continue to grow. William L. McKnight
16 Challenge 4: Leadership and Strategic VisionThe role of leadership Allowing failures Patient with experimentation Strategic visions The link between structure, culture, and growth strategies The evolution of strategies The 25% rule From single market to multiple markets From new market niche to competition in existing markets
17 Unanswered Questions Politics in organizations Culture:Vested interests in existing technologies, products Competition, turf wars among labs, divisions Culture: How is it sustained with the flow of people in organizational growth? The costs of innovation Failures, start-up costs, learning curves Demands for new structures, resources Organizational Life Cycle Entrepreneurship, expansion, structural differentiation, and associated challenges Changes in environments Imitation-competition from other companies
18 Three Lenses to “see” Organizational ChangePolitical: interests coalitions resources/power Cultural: artifacts values assumptions Strategic: leadership timing process alignment
19 The strategic lens Organization as a system designed to achieve certain goals; Focus on principles for organizational design Strategic intent Linking strategy and organization Strategic grouping Strategic linking of jobs, departments, and functions Alignments of rewards & incentives with grouping Fit between organization and environments
20 Processes in strategic designAssess environment (Threats and opportunities Industry analysis, etc.) Strategic Organizational Design (grouping, Linking, Alignments) Strategic Intent Assess organization (Core competences, Organizational capacities)
21 The political lens Organization as a political coalitionIdentify and map relationships among stakeholders, and their different interests and goals Focus on – sources and strength of power distribution of resources coalition building bargaining processes
22 Public interest groups (e.g., environmental groups)The Stakeholder Model Professional Community Shareholders Top Managers Researchers Customers FIRM Local Community Middle Managers Workers Suppliers Unions Public interest groups (e.g., environmental groups) Banks/Creditors
23 The cultural lens Organization as a system of symbols and meaningsThe importance of history and interpretations Official culture versus subculture Formal authority versus informal social control Cultural context and strategic design
24 Three Lenses to “see” Organizational ChangePolitical: interests coalitions resources/power Cultural: artifacts values assumptions Strategic: leadership timing linking process
25 Goal of the course: A repertoire of managerial skillsVocabularies – how do we talk about changes? Issues: leadership, coalition building, culture, etc. Analytical models – how do we analyze changes? Political Cultural Strategic Hand-on practice—how do we manage changes? Case studies Simulation Debates, brainstorm, collective diagnosis
26 Different images of organizationsOrganization as a system for rational design Organization as a political coalition Organization as a system of symbols and meanings What are the implications for understanding organizational changes? What are the implications for managing changes in organizations?
27 Overview of the course Leadership Agents Recipients