1. Organization Development and Change Thomas G. Cummings Christopher G. Worley Chapter Twenty: Organization Transformation

2. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-2 Learning Objectives for Chapter Twenty To explore a framework that categorizes different types of organizational change efforts with emphasis on the features of transformational change To present three large-scale organizational change interventions: culture change, self- design, and organization learning and knowledge management

3. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-3 Characteristics of Transformational Change Triggered by Environmental and Internal Disruptions Systemic and Revolutionary Change New Organizing Paradigm Driven by Senior Executives and Line Management Continuous Learning and Change

4. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-4 The Concept of Organization Culture Basic Assumptions Values Norms Artifacts

5. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-5 Diagnosing Organization Culture Behavioral Approach –Pattern of behaviors (artifacts) most related to performance Competing Values Approach –Pattern of values emphasis characterizing the organization Deep Assumptions Approach –Pattern of unexamined assumptions that solve internal integration and external adaptation problems well enough to be taught to others

6. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-6 Competing Values Approach Flexibility & Discretion Stability & Control External Focus & Differentiation Internal Focus & Integration Market Hierarchy ClanAdhocracy

7. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-7 Culture Change Application Stages Establish a clear strategic vision Get top-management commitment Model culture change at the highest level Modify the organization to support change Select and socialize newcomers; downsize deviants Develop ethical and legal issues

8. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-8 Self-Designing Organizations Systemic change process altering most features of the organization Process is ongoing, never finished— continuous improvement and change Learning as You Go—on-site innovation Need support of multiple stakeholders All levels of the organization adopt new strategies and change behaviors

9. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-9 Laying the Foundation The Self-Design Strategy Acquiring Knowledge Diagnosing Designing Implementing and Assessing Valuing

10. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-10 Organization Learning & Knowledge Management Organization Learning interventions emphasize the structures and social processes that enable employees and teams to learn and share knowledge Knowledge Learning focuses on the tools and techniques that enable organizations to collect, organize, and translate information into useful knowledge and institutionalize it

11. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-11 Organization Learning: An Integrative Framework Organization Characteristics Structure Information Systems HR Practices Culture Leadership Organization Learning Processes Discovery Invention Production Generalization Organization Knowledge Tacit Explicit Competitive Strategy Organization Performance Knowledge Management Organization Learning

12. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-12 Characteristics of a Learning Organization Structures emphasize teamwork, information sharing, empowerment Information systems facilitate rapid acquisition and sharing of complex information to manage knowledge for competitive advantage Human resources reinforce new skills and knowledge Organization culture encourages innovation Leaders model openness and freedom to try new things while communicating a compelling vision

13. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-13 Organizational Features Bureaucratic-------Organic Structure Hierarchical------------------Lateral Projects Individual-------------------------Team Density of projects Few/standalone-----Numerous/overlapping Departmentation Functional---------------------Matrix Empowerment Mgmt/staff------Operating personnel Information system focus Control --------Decision support Data base Dedicated to users----------Shared broadly Availability of data Delayed------------------Real time

14. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-14 Organizational Features Bureaucratic-------Organic Human resources system Tightly constrained-------Loosely constrained –Appraisal system Mgmt controlled--------------------Jointly controlled –Reward system focus Short term performance---------------Long term –Development reward Job based pay-----------Performance based pay –Skill development program Job focus---------Continuous development Organizational culture Closed/stable-----Open/changing –Tolerance for risk Limited-----------------------------------Extensive –Norms for practice Established procedures-Experimental/creative –Orientation to change Maintain status quo---Learning/development

15. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-15 Organizational Features Bureaucratic-------Organic Leadership emphasis Optimize today’s performance---Optimize for future –Responsiveness Closed-------------------------------------Open –Risk taking Low risk posture-----------------------Acceptance of risk –Action orientation Emphasize action----------------------Emphasize reflection –Vision Extant knowledge implementation---Learning organization –Advocacy of behavior Control and direction------------------ Empathy & support Distributing knowledge Passive------------------------------------Active –Codification of best practices Limited-----------------------------------Extensive –Use of networking/knowledge maps Limited--------------------------- Extensive –Distributing knowledge Pull-----------------------------Push & pull –Use of Knowledge services/networks Limited-------------------------Extensive – Facilitating transfer methods Limited--------------------------Extensive

16. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-16 Organization Learning Processes Single loop learning –Most common form of learning –Aimed at adapting and improving the status quo Double loop learning –Generative learning –Questions and changes existing assumptions and conditions Deuterolearning –Learning how to learn –Learning how to improve single and double loop learning

17. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-17 Model 1 Learning: Single loop o Cybernetic learning: In single loop learning, the existing system is taken as given. For example, 2% of allowable error in production is viewed as the best balance between cost and quality and customer satisfaction. o Performance is monitored to determine deviations from standard. Feedback loop on deviations from standard results in intervention to bring the system back to the standard. o Quality performance falls below the standard of 2% allowable error in production. Management intervenes to find why the performance has fallen (employee, equipment, supplies,...at fault). Intervenes to correct the cause of the short-fall in quality. Process is continued until quality is brought up to standard. Initial diagnosis or intervention may not be effective so supervisor tries something else ( supervisor learns). o Employee empowerment is implemented to improve level of motivation, commitment and performance of employees, but no observable change occurs. In cybernetic learning, the supervisor investigates—why didn’t the expected results occur? It may be that a the program of employment is put in place, while retaining the high risk environment for those who make mistakes. The supervisor may explore several different causes before stumbling on to the major deficiency in the system.

18. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-18 Model 2 Learning: Double loop Non cybernetic learning—double loop learning: In double loop learning, the existing system is critically assessed on its appropriateness. -- The view that error rates and costs are tradeoffs may be questioned --An alternative view is that where all costs area considered, quality can be improved & costs reduced either simultaneous, or over time as critical mass in quality improvement is achieved. – A program to reduce error from 2% to approaching zero % (99.999% error free) is viewed as the best balance between cost, quality &customer satisfaction. – Example 2: Employee empowerment is implemented to improve level of motivation, commitment & performance of employees, but no observable change occurs. In double loop learning, the supervisor investigates—why didn’t the expected results occur? It may be that the program of empowerment is put in place, while retaining the high risk environment for those who make mistakes. The supervisor may explore several different causes before stumbling on to the major deficiency in the system, and revising the program to include creating a reduced risk environment.

19. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-19 Model 3 Learning: Deutro learning In deutro learning, the system of learning is examined to evaluate whether the learning method meets the goals of creating a learning system. The way in which analysis is done is evaluated such as where assumptions are made that the system can be analyzed as a static, deterministic, unidirectional, linear set of variables without lag effects. An alternative analytic may be explored that develops that the assumptions of two-way interdependent dynamics is involved with probabilistic, curvilinear or discontinuous effects with indeterminate lags before emerging results are identified

20. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-20 Organizational learning processes Limited--------------Partly in place------Extensive Types of discovery/invention Single loop----Double loop----Deutro learning Model 1 Model 2 learning Model 3 type Techniques for generation & diffusion of knowledge Institutional Methods Limited--------------------------------Extensive Communities of practice Passive support----------------Active support Creation of formal learning centers (R&D units, corporate schools, etc) Limited-------------------------Extensive Use of external consultants Limited--------------------------------Extensive Use of creative abrasion groups Limited------------------------------Extensive

21. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-21 Discover Theories in Use Dialogue Left-Hand, Right-Hand Column Action Maps The Ladder of Inference

22. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-22 Organizational learning processes Limited--------------Partly in place------Extensive Intervention Techniques Limited------------------------------------------Extensive –Discovering theories in use Limited ------------------------------------------------Extensive Dialogue Limited/defensive----------------------Extensive/Open Action maps Implicit/untested------------------------Explicit/validated Assumption surfacing Unsystematic--------------------------------Systematic –(Left-hand, right hand column) technique –Ladder of inference technique –Invent more effective theories Sustain status quo---------------------Revise existing theories Organizing framework Existing business model------Revised business model Exploring interdependence Subsystem focus----------------System focus Developing relationships Static/one way/linear--------Dynamic/two way/curvilinear Monitor & improve learning process Limited------------------------------Extensive –Action plans Talk/planning--------------------------Walk the talk/action –Diffusion process Limited/equilibrium------Extensive/shifting equilibrium –Scope of learning Individual/ groups-------------------Institutionalized/organization

23. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-23 The Ladder of Inference I take ACTIONS based on my beliefs I adopt BELIEFS about the world I draw CONCLUSIONS I make ASSUMPTIONS based on the meanings added I add MEANINGS (cultural and personal) I select DATA from what I observe I OBSERVE data and experiences

24. Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-24 Organization Knowledge Generating Knowledge –Identify knowledge for competitive strategy –Develop ways to acquire or create that knowledge Organizing Knowledge –Put knowledge into a usable form –Codification and Personalization Distributing Knowledge –Making knowledge easy to access, use & reuse