M A N A G E M E N T M A N A G E M E N T 1 st E D I T I O N 1 st E D I T I O N Gulati | Mayo | Nohria Gulati | Mayo | Nohria Chapter 11 Chapter 11 ORGANIZATIONAL CHANGE ORGANIZATIONAL CHANGE ©South-Western, a part of Cengage Learning PowerPoint Presentation by Charlie Cook ORGANIZATIONAL PERSPECTIVE

Learning Objectives Describe the processes and activities that organizations go through to adapt or transform themselvesDescribe the processes and activities that organizations go through to adapt or transform themselves Outline the key drivers of change including those stemming from the external and internal environments of an organizationOutline the key drivers of change including those stemming from the external and internal environments of an organization Differentiate between the different approaches to organizational change including proactive versus reactive, planned versus organic, and incremental versus transformativeDifferentiate between the different approaches to organizational change including proactive versus reactive, planned versus organic, and incremental versus transformative © South-Western, a part of Cengage Learning 11–2

Learning Objectives Describe the change process and the key elements that comprise itDescribe the change process and the key elements that comprise it Explain how organizations and change leaders combat resistance to changeExplain how organizations and change leaders combat resistance to change © South-Western, a part of Cengage Learning 11–3

Organizational Change © South-Western, a part of Cengage Learning11–4 Consists of the processes and activities that organizations go through to adapt or transform themselves according to internal or external phenomena or according to future potential opportunities

Disruptive Innovation © South-Western, a part of Cengage Learning11–5 Improve the performance of established products, along the dimensions of performance that mainstream customers in major markets have historically valued Sustainable technologies Create a separate in-house organization where new processes and values are developed Divide and create an independent organization designed to specifically build the new innovation Buy the capacity to handle and build the new innovation by acquiring a firm that has the resources to do so Create a separate in-house organization where new processes and values are developed Divide and create an independent organization designed to specifically build the new innovation Buy the capacity to handle and build the new innovation by acquiring a firm that has the resources to do so Options to grow innovation Innovative forces that that include a different set of attributes than those valued by mainstream customers Disruptive technologies

Change Driven by the Internal Environment © South-Western, a part of Cengage Learning11–6 Inertia: The inability of organizations to change as rapidly as the environment

© South-Western, a part of Cengage Learning11–7 Figure Balancing the Change Process

Types of Organizational Change © South-Western, a part of Cengage Learning11–8 A process where change efforts are planned and driven from corporate strategy departments or top- down directives Planned change A process by which change emerges from individuals or teams as they innovate, solve problems, seek more effective ways to accomplish their work, react to large environmental shifts, or interact with others in cross- functional positions Organic change

Types of Organizational Change © South-Western, a part of Cengage Learning A process in which change is initiated in response to some known external threat or opportunity Reactive change A process in which change is initiated based on some anticipatory event or opportunity on the horizon Proactive change A process in which small improvements or changes are made to processes and approaches on an ongoing basis Incremental change A process in which change is radical or disruptive, typically in response to a major competitive threat and/or significant change in the external or internal environments Transformative change 11–9

The Change Process © South-Western, a part of Cengage Learning11–10 A component of the change process in which creating dissatisfaction with the status quo helps to free people and organizations from complacency or inertia. It often creates the spark needed to begin the change process Dissatisfaction

© South-Western, a part of Cengage Learning11–11 Figure A Change Process D=Dissatisfaction with the status quo M=A new model for the organization P=Process for change Rc=Resistance to Change Cc=Cost of Change that employees experience

Developing a New Model for the Future Model: A vision for changeModel: A vision for change Change modelChange model –Tells clearly what is being changed and why –Offers employees hope and a higher sense of meaning –Fits with the firm’s expected contextual landscape Communicating the model requires:Communicating the model requires: –An appeal to both logic and emotions –Making a compelling case for change based on benchmarking © South-Western, a part of Cengage Learning11–12

© South-Western, a part of Cengage Learning11–13 Figure Characteristics of Effective Models

The Implementation Process: Steps to Success Process: A series of plans and approaches to implement a change effortProcess: A series of plans and approaches to implement a change effort Establish a sense of urgency and form a powerful guiding coalitionEstablish a sense of urgency and form a powerful guiding coalition Develop a vision and communicate itDevelop a vision and communicate it Empower others to act on the visionEmpower others to act on the vision Plan for and create short-term winsPlan for and create short-term wins Consolidate improvements and produce more changesConsolidate improvements and produce more changes Institutionalize changes in the cultureInstitutionalize changes in the culture © South-Western, a part of Cengage Learning11–14

© South-Western, a part of Cengage Learning11–15 Figure Process for Implementing Change

© South-Western, a part of Cengage Learning11–16 Figure Combating Resistance to Change

Characteristics of Change Leaders © South-Western, a part of Cengage Learning11–17 Change leader characteristics Ability to motivate oneself and others Concern about how people are treated Ability to maintain a relatively low profile and share credit Commitment to a better way Courage to challenge existing power bases and norms Personal initiative to move beyond defined boundaries Sense of humor about themselves and the situation

KEY TERMS © South-Western, a part of Cengage Learning 11–18 Disruptive technologies Dissatisfaction Incremental change InertiaModel Organic change Organizational change Planned change Proactive change Process Reactive change Transformative change