1. Managing Strategic Change: Building Learning Organizations
Chapter 13
Managing Strategic Change: Building Learning Organizations
by Robert Pitts
& David Lei
Slides prepared by
John P. Orr
Cameron University
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.

2. What you will learn… Why companies need to think about change
Slide 1 of 2
Why companies need to think about change
The concept of a learning organization
The key practices found in learning organizations
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.

3. What you will learn…
Slide 2 of 2
Why static organizations have difficulty in responding to change
The steps senior managers use in dealing with resistance to change
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.

4. Learning at Sony Resource allocation Extensive decentralization
Bias against specialists
Frequent rotation of staff
Multiple experiments
Balance of psychological and monetary rewards
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.

5. Change and Learning Learning Organizations Static Organizations
Firms that view change as a positive opportunity to learn and create new sources of competitive advantage
Static Organizations
Firms that have adapted extremely well to a particular environment but lack the ability to respond quickly to change
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.

6. Characteristics of the Learning Organization
Frequent rotation of managers
Continual training of personnel
Decentralization of decision making
Encouragement of multiple experiments
High tolerance for failure
Openness and diversity of viewpoints
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.

7. Ex. 13-1. Management Practices of Learning Organizations
Continual
Training
High
Tolerance of
Failure
Decentralization
Openness &
Diversity of
Ideas
Frequent
Rotation of
Managers
Multiple
Experiments
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.

8. Implementing Change in Static Organizations
Resistance to change in static organizations
Change steps
From static to learning organization
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9. Ex. 13-3. Common Reasons for Organizational Resistance to Change
Lack of awareness of need to change
Lack of interest in opportunity for change
Incompatibility of change with existing views or interests
Fear of cannibalization
Fear of personal loss
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.

10. Ex. 13-4. Key Steps to Implement Strategic Change
Sense the need for strategic change
Build awareness of the need to change and learn
Foster debate
Create consensus
Assign responsibility
Allocate resources
Act quickly
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.

11. Static to Learning Boundaryless Organization
An organization design in which people can easily share information, resources, and skills across departments and divisions.
SBU 3
SBU 2
Sales
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12. Ex. 13-5. Corporate Transformations: Making General Electric Boundaryless Slide 1 of 2
GE vulnerable to change
Slow growth
Average earnings
High divisional walls
Lots of protected turf
Resistance to change
Reduce number of peripheral businesses
Sell nonperforming assets
Break down strong SBU lines
Delayer management hierarchies
Adopt new rewards system
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.

13. Ex. 13-5. Corporate Transformations: Making General Electric Boundaryless Slide 2 of 2
Form strategic alliances
“Work Out”
Team with suppliers/ customers
Share knowledge and skills across GE’s SBUs
Promote those who take risks
Invest in streamlines product development
Reduce SBU walls even more
Invest in Asia/Europe
Foster continual training and development
Encourage best practices and benchmarking
Promote common vision
Hire people with entrepreneurial tendencies
“Six Sigma”
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.

14. Ethical Dimension Diversity and Knowledge Base
Operations increase in global scope
Corporations search world for cutting-edge skills
Ways to increase interchange
Use Internet pathways
Tap ideas of people from multiple cultures
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15. Tapping Worldwide Talent
AT&T
Hewlett-Packard
Intel
Microsoft
Sun Microsystems
Texas Instruments
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16. Ethical Dimension Helping Employees Cope with Change
Change often most difficult for senior employees
Options for AT&T top management
Fire obsolete employees, risk damaging morale
Retrain senior employees, despite expense
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.