1. Organization Transformation and Strategic Change
Chapter 15
Organization Transformation and Strategic Change
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

2. Learning Objectives (part 1 of 2)
Identify and define organization transformation.
Understand basic strategy-culture matrix and other approaches to changing culture.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

3. Learning Objectives (part 2 of 2)
Recognize importance of corporate culture and its relation to strategy.
Experience these concepts in management simulation.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

4. 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.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

5. Organizational Transformation (part 1 of 3)
OT refers to drastic changes in:
How organization functions.
How it relates to environment.
OD strategies represent more gradual approaches to strategic change.
OT approaches are drastic and abrupt change.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

6. Organizational Transformation (part 2 of 3)
OT may or may not be developmental.
OT tends to use directive, not participative, approaches to change.
Usually top-down, top-management driven.
OT shaped by use of power rather than collaboration.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

7. Organizational Transformation (part 3 of 3)
Requires:
Shared vision.
Willingness to clean house.
Restructure.
Tackle many problems.
Due to immediate threat, this may be only way for organization to survive.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

8. Large-Scale Change Strategies
Incremental.
Long-term planned change.
Relies upon collaboration.
Transformative.
Immediate, drastic change.
Uses directive methods.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

9. Large-Scale Change Model
Model based on 3 key dimensions.
Time frame of change—short or long.
Level of support of organizational culture.
Degree of discontinuity with environment.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

10. Figure 15.2 Strategies for Planned Change
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

11. Four Change Strategies (part 1 of 2)
Participative evolution.
Incremental and anticipates change.
Support of culture through collaborative means.
Charismatic transformation.
Radical change in short time with support of culture.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

12. Four Change Strategies (part 2 of 2)
Forced evolution.
Incremental adjustments over longer period without support of culture.
Dictatorial transformation.
Used in times of crisis.
Major restructuring running counter to internal culture.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

13. Results of OT
OT may be best or only way to bring back an organization under immediate threat.
OT more likely to be used by externally recruited managers.
OT is risky and outcome is uncertain.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

14. The Corporate Culture
System of shared values held by members that distinguishes one organization from another.
CEO and managers’ actions, not words, produce culture.
A culture is organization’s major strength when consistent with strategies.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

15. Strategy-Culture Fit Strategy: Culture:
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.
An Experiential Approach to Organization Development 8th edition
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16. Core Characteristics of Culture
Individual autonomy.
Sensitivity to customers and employees.
Managers provide support and assistance.
Employees initiate new ideas.
Openness of communication channels.
Risk-seeking encouraged.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

17. Sharing the Vision
Management theorists feel vision is essence of leadership.
Vision involves several stages.
Share the vision.
Empower the individual.
Develop trust.
Reward performance.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

18. Figure 15.3 Sharing the Vision
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

19. Strong Versus Weak Cultures
Strong culture.
Basic values intensely held and widely shared.
Weak culture.
May be seen in young company or one with high turnover.
Culture is product of key components.
Structure, systems, people, and style.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

20. Figure 15.4 Relative Strength of Cultures
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

21. Strategy-Culture Matrix (part 1 of 4)
Four basic alternatives in determining strategy changes:
Manage change (manageable risk).
Change important and compatible with culture.
Use cultural reinforcement as strategies.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

22. Strategy-Culture Matrix (part 2 of 4)
Reinforce culture (negligible risk).
Forge vision that emphasizes shared values.
Reinforce existing culture.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

23. Strategy-Culture Matrix (part 3 of 4)
Manage around culture (manageable risk).
Change important and incompatible with present culture.
Reinforce value system, reshuffle power, use leverage in the organization.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

24. Strategy-Culture Matrix (part 4 of 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.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

25. Figure 15.5 Strategy-Culture Matrix
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

26. Strategic Change Management
Seeks to align organization’s strategy, structure, and human resources to fit environment.
Parts of system in perpetual interaction with environment.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

27. Organizations Composed of 3 Systems
Technical - solve production problems.
Political - solve allocation problems of resources and power.
Cultural - solve value/belief problems.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

28. Figure 15.6 Environmental Forces and Organizational Systems
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

29. 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.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

30. Reasons for Large-Scale Cultural Changes
Company has strong values that do not fit changing environment.
Industry competitive and changes quickly.
Company mediocre or worse.
Firm about to join ranks of very largest.
Firm small but growing rapidly.
An Experiential Approach to Organization Development 8th edition
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31. Cautions in Cultural Change
Cultural change can be difficult and time consuming.
Should be attempted only after less-difficult solutions have been ruled out.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

32. OD Application Transformation at Home Depot
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.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

33. Nardelli was brought in as CEO to turn around dysfunctional culture.
Nardelli brought in new top management team.
Lacked support from lower levels.
Changes resulted in unintended consequences.
An Experiential Approach to Organization Development 8th edition
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34. Culture became one of revolt.
Innovation and sense of ownership declined.
When market share declined more, board replaced Nardelli with Ellison.
Ellison has made methodical and long-range changes.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

35. Key Words And Concepts Culture. Incremental approach.
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.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

36. Strategic change management.
Focus on alignment with strategy, structure, and human resources systems.
Strategy.
Course of action used to achieve major objectives.
Strategy-culture matrix.
Assess readiness of culture for strategic changes.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

37. Technical, political, and cultural systems.
Organizational systems of strategic change management model.
Transformational change.
Immediate drastic change accomplished by directive methods.
Vision.
Mental image of a possible and desirable future state of organization.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

38. OD Skills Simulation 15.1 The GenTech Company
Purpose.
To experience and observe how information affects strategic decision making.
To develop strategy and culture in an organization.
To receive feedback on your risk-taking level.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

39. Preparations for Next Chapter
Read Chapter 16.
Complete the Profile Survey and Profile Form in Simulation 16.1, Part A, Step 1.
Complete Step 1 of OD Skills Simulation 16.2.
An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall

40. An Experiential Approach to Organization Development 8th edition
Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall