Chapter 14

Organizational Change and Development

Michael A. Hitt C. Chet Miller Adrienne Colella
Slides by Ralph R. Braithwaite
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The Evolution of Starbucks

As Starbucks grew, they realized that the informal techniques were not sufficient and needed to have a more formalized process in place. Why were these changes difficult for the Howard Schultz organization?

Starbucks is faced with new challenges today. It has dominated the marketplace. Have they grown too fast? Will changes in the marketplace Dave Olsen require a different approach? What do you think the future will hold for them?

Exploring Behavior in Action

Dawn Pinaud
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Organizational Change and Development

Polaroid introduced instant photography to the market. They were one of the top 50 companies in the U.S. But they, like many others, were slow to change. What would you have done differently if you were a senior manager at Polaroid?

Can you think of any other companies that were too slow to change and suffered the consequences? Why is change so difficult to manage?

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Knowledge Objectives
1. Describe two major internal pressures for change. 2. Identify and explain six major external pressures for change 3. Describe the three-phase model of planned change. 4. Discuss important tactical choices involving the speed and style of a change effort. 5. Explain the four general causes of resistance to change and the tactics that can be used to address each cause. 6. Discuss the role of the DADA syndrome in organizational change. 7. Describe the basic organization development (OD) model and discuss OD interventions, including relationship techniques and structural techniques.
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Pressures for Change

Aspirations Life-Cycle Forces Growing International Interdependence

Technological Advances

Introduction or Removal of Government Regulations

Pressure for Change

Changes in Demographics Changes in Societal Values Shifting Political Dynamics

Adapted from Exhibit 14-1: Internal and External Pressures for Organizational Change

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Aspiration-Performance Discrepancies
Gaps between what an individual, unit, or
organization wants to achieve and what it is actually achieving.

Three important factors in the role of

aspirations

Past aspirations Past performance Comparison with others

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Life-Cycle Forces
Natural and predictable pressures that build as an organization grows and that must be addressed if the organization is to continue to grow.

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Integrative Life-Cycle Model

Entrepreneurial Stage
Need for stability and structure

Need for additional people

Collectivity Stage

Formalization and Control Stage

Need for balance

Elaboration Stage
Adapted from Exhibit 14-2: Integrative Life-Cycle Model

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External Pressures for Change

Technological advances Introduction and removal of government regulations Shifting political dynamics Changes in demographics

Changes in societal values

Growing international interdependence

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Managerial Advice

Companies Responses to Pressures for Green Policies and Practices

Are companies becoming more green for reasons other than the bottom-line? Give some examples. What is your organization doing to become more green? What are you doing personally? Should becoming green be a choice or is legislation needed to make it happen?

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Planned Change
A process involving deliberate efforts to move an organization or a unit from its current undesirable state to a new, more desirable state
Awakening Energizing Unfreezing

Mobilizing

Envisioning

Moving

Reinforcing

Enabling

Refreezing

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Process of Planned Change

Kurt Lewin

Unfreezing
Provide rationale
for change Create minor levels of guilt/anxiety about not changing Create sense of psychological safety concerning change

Moving
Provide information
that suspects proposed changes Bring about actual shifts in behavior

Refreezing
Implement new
evaluation systems Create minor levels of guilt/anxiety about not changing Implement new hiring and promotion systems

Adapted from Exhibit 14-3: Process of Planned Change

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Coca-Cola Is Finding a New Fizz

Coca-Cola is changing its culture, and also adapting its product line to better satisfy the demand of customers.

What are your thoughts about the Neville Isdell steps they are taking regarding Sandy Douglas these changes? Do you think the new innovations and changes will have a positive or a negative impact on their existing brands? Why? What other changes would you suggest to help them remain competitive?

Experiencing Strategic OB

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Sources of Failure
1. Managers and associates should not expect all change activities to occur sequentially. 2. A team of change leaders, rather than a single individual, should guide an organization through a major change effort.
In addition to size, four factors to consider when forming change teams:
Position Power
John Kotter

Informal Credibility Proven Leadership

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Expertise

Speed of Change
Urgency Degree of support

Criteria to Consider

Amount and complexity of change

Competitive environment
Knowledge and skills available

Financial and other resources

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Style of Change
Non-participatory top down, leaders design the change and plan its implementation

Participatory change leaders seek the ideas and advice of associates and then use many of those ideas. Criteria for evaluating the degree to which the participatory style should be used:
Degree of Support Referent and Expert Power of Leaders

Urgency

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Resistance to Change
Effort to block new ways of doing things

Four Factors
Lack of understanding Different assessments

Self-interest

Low tolerance for change

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British Airways: The Yin and Yang of Organizational Change

Do you think there was any incentive for British Airways to change prior to deregulation? Why do you think the changes were effective? Given the problems faced by all the major airlines at the time, why do you think there was still so much resistance to the changes? What other changes would you recommend at Willie Walsh this time?

Experiencing Strategic OB

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The DADA syndrome

Denial ignore possible or current change Anger individuals facing unwanted change
become angry about the change

Depression individuals experience

emotional lows

Acceptance individuals embrace the

reality of the situation and make the best of it
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Organization Development (OD)

A planned, organization-wide, continuous process designed to improve communication, problem solving, and learning through the application of behavioral science knowledge

Roots in humanistic psychology Grounded in values of individual empowerment and

interpersonal cooperation

Fully consistent with the high-involvement

management approach

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Basic Organization Development Model

Diagnosis of Situation

Feedback

Introduction of interventions

Progress Monitoring
Adapted from Exhibit 14-4: Basic Organization Development Model
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Organization Development Interventions

Organization Development
Relationship Techniques Structural Techniques

T-group Training Team Building Survey Feedback

Job Redesign Management by Objectives Supplemental Organizational Processes

Adapted from Exhibit 14-5: Organization Development Interventions

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Relationship Techniques
T-group Training

Team Building

Survey Feedback
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Team Building Tips

Get the right people together for a large block of uninterrupted time to work on high-priority problems or opportunities that they have identified and have them work in ways that are structured to enhance the likelihood of realistic solutions and action plans, which are then implemented enthusiastically and followed up to assess actual versus expected results.

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Job Redesign

Structural Techniques

Management by Objectives (MBO)

Supplemental Organizational Processes

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Organizational Learning
Exploitative Learning Exploratory Learning

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Organization Development Across Cultures

Flexibility

Ethnocentric Attitude and Stereotyping

Knowledge of Specific Cultures Interpersonal Sensitivity

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The Strategic Lens

1. Why do organizations need to make changes on a regular basis? What are the major causes of these changes? 2. Why is it so difficult for people to change their behavior, even when they know it is important to do so? 3. If you were in a managerial position and believed that a major change in your units structure was needed, what actions would you take to ensure that the change was made effectively?

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Questions

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