TRANSORGANISATIONAL CHANGE

INTRODUCTION Merging or networking with other organisations Organisations extend their boundaries to cope with complexity and rapidly changing environment They merge with others or acquire others to: gain essential capabilities and resources operate at large scale Enter new markets Tackle complex problems or project that single org cannot achieve Form strategic alliances to share costs and expertise Strategies, goals, structures etc. become interdependent Conflicts and misunderstandings can occur

MERGERS AND ACQUISITIONS (M&As) Combination of two organisations Merger Acquisition Integration of two previously independent organisations into a complete new organisation Purchase of one organisation by another for integration into acquiring one REASONS FOR M&A’s Diversification Gaining access in new markets, technology or other resources Achieving operational efficiency Improved innovation Resources and cost sharing DISADVANTAGES OF M&A’s Questionable records for success Inadequate processes and failure to move quickly Lack of a compelling strategic rationale Unrealistic expectations of synergy Conflicting corporate cultures

APPLICATION STAGES Pre-combination phase: Search and select candidate – screening, regulations etc. initial agreement Create an M&A team – Senior leaders for planning Establish business case – vision, strategy, competitive advantage Perform a due diligence assessment – Evaluate availability of resources, articles Develop merger integration Plans – How the two will combine Operational Combination phase: Communications and actions for implementation – tasks, functions, location Operational & technical Integration activities – structural changes, work design Cultural Integration activities – New values and norms

STRATEGIC ALLIANCE Formal agreement – to share resources, intellectual property, people, capital, technology, capabilities or physical assets Collaborative effort (franchising, licensing agreements, joint ventures) APPLICATION STAGES: Alliance strategy formulation – clarify business strategy Partner selection – search for appropriate partner (screening) Alliance structuring and start-up (after agreement) – build and leverage trust in the relationship; contracts, governance structure, investments etc. Alliance operation and adjustment – functioning, diagnosis and make changes

NETWORK INTERVENTIONS Create networks and improve their effectiveness: various stages Identification stage Identify existing and potential organisation, which are best suited to achieve collective objectives Might be difficult as some might not see the need to join together Few organisations interested in exploring the possibility of creating a network – identify organisations meeting standards Convention stage Bring them together to assess whether formalizing the networks is feasible and desirable Face-to-face meetings of potential members to explore their motivations for joining and their perceptions of activities to be performed Sufficient levels of motivation and task consensus to form network Organisation stage Movement from convention into organisation Members organize themselves for task performance Members develop structures and mechanism to promote communication Evaluation stage Assess how network is performing – Members need feedback to identify problems and begin to resolve it

Manage change in the established network (Communication) Look at instabilities in networks (diagnosis) – create instability in network Manage the tipping point: determine process, type and direction of change Unstable network can move to a new state. Guidelines for facilitating network change: Law of the few: A new idea, practice spreads because of a relatively few but important roles in network Following help to achieve awareness and credibility throughout network: Connectors (central position, tap in different network audiences, connect quickly with many other people), Mavens (information sinks) knowledge about particular subject Salespeople (champions of change: influence others to try new ideas/options) Stickiness: Message communicated must be memorable Power of context: Message must be meaningful & relevant to network members Move unstable networks to new Rely on self organisation – exhibit self-organising behaviour reduce uncertainty in environment, establish order in functions, leverage controls to institutionalize it (i.e. refreeze change)