Chapter 12 Organizational Change and Learning

Learning Goals 1.Describe four types of organizational change 2.Explain the planning process for organizational change 3.Identify four methods of organizational change 4.Describe how innovation relates to organizational change 5.Discuss how learning organizations foster change

Organizational Change Organizational change refers to any transformation in the design or functioning of an organization.

(adapted from Figure 12.1) TransitioningRefreezingUnfreezing  Radical change: organizations make major innovations in the ways they do business  Stages of Radical Change*

 Incremental change: ongoing process of evolution over time, during which many small adjustments occur routinely  Tempered radicals: people who strive to create radical change but do so by prodding an organization to make many small incremental changes  Total quality management: relies heavily on continuous incremental change

1.Earn credibility first, and then leverage it 2.Gather and accept support from others along the way 3.Develop grass roots initiatives and be willing to share the stage with supporters 4.Chip away at standard operating procedures little by little over time until you achieve real success 5.Accept small changes as making progress 6.Develop your ability to compromise as well as persuade 7.Be persistent

 Reactive change: occurs when an organization is forced to adapt or innovate in response to some event in the external or internal environment  Anticipatory change: occurs when managers make organizational modifications based on forecasts of upcoming events or early in the cycle of a new trend

Types of Organizational Change (adapted from Figure 12.2) Radical Anticipatory Change Incremental Reactive Change Radical Reactive Change Degree of Change Before Major Shifts in the Environment After Major Shifts in the Environment Major Transformation Small Adjustments Incremental Anticipatory Change Timing of Change

The Process of Organizational Change (adapted from Figure 12.3) 6. Anticipate Resistance and Take Action to Reduce 7. Monitor the Changes 1. Assess the Environment 5. Develop and Implement an Action Plan 2. Determine the Performance Gap 3. Diagnose Organizational Problems 4. Articulate and Communicate a Vision for the Future Start

Fear Vested interests MisunderstandingsCynicism

Technological ChangeOrganizational Redesign Job RedesignOrganizational Development

Technological Change  Involves incremental adjustments or radical innovations that affect workflows, production methods, materials, and information systems MM any new forms of information technology (IT)  IT is enabling real time and any time links between suppliers, producers, distributors, and customers

 Involves incremental adjustments or radical innovations focused on realigning departments, changing who makes decisions, and merging or reorganizing departments that sell the organization’s products  Two basic approaches Change organization’s structure, such as from functional to product departmentalization Change organization’s processes, such as how customer complaints are handled  Restructuring: reconfiguring the distribution of authority, responsibility, and control in an organization  Reengineering: radical redesigning of an organization’s functions and business processes

Job Redesign  Modifying specific employee job responsibilities and tasks  Job simplification: the scientific analysis of tasks  Focus on efficient workflow process for employees in a particular job  Frequent use of time and motion studies  Job enrichment: changing job specifications to broaden and add challenge to the tasks required and to increase productivity  Increases interesting and challenging work  Increases autonomy and personal freedom

 A planned, long-range behavioral science strategy for understanding, changing, and developing an organization’s workforce in order to improve its effectiveness  Focus group discussion: a carefully planned discussion among several employees about a specific topic or issue of interest, which is led by a trained facilitator  Facilitator explains the topic to be discussed, the role of the scribe, and how the organization will use the results of the focus group discussion  Participants come prepared to discuss a specific topic. If confidentiality is a concern, participants are chosen from different units of the organization, not the same work group  Scribe: the person who takes notes about what is said, but not who says it

How to Set Up a Focus Group Discussion (adapted from Figure 12.5) The facilitator explains the topic to be discussed, the role of the scribe, and how the organization will use the results of the focus group discussion. The scribe takes notes about what is said, but not who says it. The participants come prepared to discuss a specific topic. If confidentiality is a concern, participants are chosen from different units of the organization, not the same work group.

Organization Development (OD) (cont’d)  Survey feedback: a process that allows managers and employees to report their thoughts and feelings about the organization and to learn about how others think and feel about their own behaviors  Feedback obtained by means of a questionnaire developed and distributed to employees, who complete it and turn it in anonymously  Content of questionnaire depends on areas of most concern Questionnaire

Organization Development (OD) (cont’d)  Team building: process that develops the ability of team members to collaborate effectively so they can perform the tasks assigned to them  Often emphasizes developing a group climate that is safe  Openness can be risky, but promotes creativity and effective problem solving

MM ajor organizational change is a complex process  Typically involves a combination of methods  Example: purchasing and installing enterprise resource planning [ERP] software

Role of Innovation in Organizational Change  Innovation: the discovery, identification and diagnosis of unusual and ambiguous problems and/or the development of unique or creative solutions  Strategic importance of innovation Critical in dynamic, changing environments Organizations can rest on prior success Complacency is deadly

 Technical innovation: creation of new goods and services  Process innovation: creating a new way of producing, selling, and/or distributing an existing good or service  Administrative innovation: creating a new organization design that better supports the creation, production, and delivery of goods and services

Foster Workforce Resilience Provide a Support System for Innovation Develop a Learning Environment and Learning Orientation among Employees

 Learning organization: has both the drive and the capabilities to modify or transform itself and improve its performance continuously LL earns from past experiences LL earns from customers LL earns from various parts of the organization LL earns from other organizations

Organic Organization Design Shared Leadership Customer-Focused Strategy Culture of Innovation Intensive Use of Information The Learning Organization

Characteristics of a Learning Organization: Snapshot “We all make mistakes. It’s not as though at any time, Dell doesn’t have some part of its business that’s not working for us as it should. But we have a culture of continuous improvement. We train employees to constantly ask themselves, ‘How do we grow faster? How do we lower our cost structure? How do we improve service for customers?’” Michael Dell, Chairman and Cofounder, Dell Computer