Organization Development and Change

Chapter Twenty: Organization Transformation

Thomas G. Cummings Christopher G. Worley

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, selfdesign, and organization learning and knowledge management
Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-2

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
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The Concept of Organization Culture

Artifacts Norms Values Basic Assumptions

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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
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Competing Values Approach

Flexibility & Discretion
External Focus & Differentiation

Internal Focus & Integration

Clan

Adhocracy

Hierarchy

Market

Stability & Control

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

The Self-Design Strategy

Laying the Foundation

Acquiring Knowledge Diagnosing Valuing

Designing

Implementing and Assessing

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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
Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-10

Organization Learning: An Integrative Framework

Organization Learning Knowledge Management Competitive Strategy

Organization Characteristics Structure Information Systems HR Practices Culture Leadership

Organization Learning Processes Discovery Invention Production Generalization

Organization Knowledge Tacit Explicit

Organization Performance

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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
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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
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Cummings & Worley, 8e (c)2005 Thomson/South-Western

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

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Organizational Features Bureaucratic-------Organic

Leadership emphasis Optimize todays performance---Optimize for future
Responsiveness Risk taking Action orientation Vision organization Advocacy of behavior Closed-------------------------------------Open Low risk posture-----------------------Acceptance of risk Emphasize action----------------------Emphasize reflection Extant knowledge implementation---Learning 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

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Organization Learning Processes

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

Double loop learning

Deuterolearning

Model 1 Learning: Single loop

o 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. 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 investigateswhy didnt 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.

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Model 2 Learning: Double loop

Non cybernetic learningdouble 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 investigateswhy didnt 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.
Cummings & Worley, 8e (c)2005 Thomson/South-Western 20-18

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
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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

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Discover Theories in Use

Dialogue Left-Hand, Right-Hand Column Action Maps The Ladder of Inference

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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

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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
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Organization Knowledge
Generating Knowledge
Identify knowledge for competitive strategy Develop ways to acquire or create that knowledge Put knowledge into a usable form Codification and Personalization Making knowledge easy to access, use & reuse
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Organizing Knowledge

Distributing Knowledge