Organizational Change Whether the result of a merger, or just the demands of a tough marketplace, significant organizational change is one

of the most difficult strategies to implement. Here's a collection of our best articles on making real, sustainable organizational change a reality. Think for a Change What can executives learn from a women`s liberal-arts college in Milwaukee? The most important lesson: how to turn their companies into learning organizations. Curtis Sittenfeld Can Philips Learn to Walk the Talk? Gerard Kleisterlee's turnaround program for Royal Philips Electronics is a high-stakes bet on a simple, catalytic idea: strategic conversations. Ian Wylie (Not) the Same Old Story Eden Alternative is a change-minded organization determined to save a critically ill patient: long-term care for the elderly. The nursing-home industry should be about living, argues founder Bill Thomas, not about dying. Here`s his prescription -- and lessons for changing any industry. Chuck Salter 7 Lessons From WaMu`s Playbook Mergers and acquisitions are, once again, shaking up all kinds of industries. The big question: How do you do them right? Here`s the playbook according to Washington Mutual, one of the best in the business. George Anders Survival Is Not Enough Hey, it's a jungle out there! So if you want to win, do more than embrace change -- learn how to evolve. Seth Godin Beyond Reengineering From our first issue forward, Fast Company has tackled the ideas of reengineering, restructuring, and rethinking how business works. Here are some of our best stories about big-business change. Fast Company A Change Will Do You Good The guardians of big business are defending their fortress against an army of interlopers whose needs and opinions clash with tradition. Two new books examine what this intrusion means to corporate insiders -- and outsiders. Keith H. Hammonds BMW: Driven by Design Chris Bangle and his design gurus are the creative engine inside the hottest car company in the world. But BMW`s most breathtaking design may well be its strategy for growth. Bill Breen Free to Innovate Fallon Worldwide couldn`t thrive on its own. Nor could it lose the creative fire that first fueled its growth. An up-start ad agency learns to love its big-company patron. Christine Canabou How Will Your Company Adapt? Charles Darwin wrote the book on natural selection: Survival of the fittest is about adaptability to a changing environment and new competitive realities. That`s just what companies face today. Paul C. Judge

without the qualitative organization-wide changes (re-engineering) necessary to sustain a permanent effort. solutions and methods that claim to help business improve productivity. virtually all training had stopped and little enthusiasm was left. Changing nothing will produce nothing. if not thousands of techniques. techniques applied with no clear focus as to the why. In response to this confusion. many do nothing. planned incremental approach. They are initially successful. To add to this confusion. Senior management proclaimed in a memo that Total Quality should be a way of life. One senior vice president declared that he wanted 25% of his organization using Total Quality tools within a year. Other organizations clearly focus on technical problems and on improving what they had.Begin at the beginning in organizational change David Chaudron. Customer Satisfaction. They are like new shoppers in a giant grocery store: They are hungry. Neither of these responses help the organization in the long run. but become victims of their own success. However. often afraid of making the wrong choices. quality and customer satisfaction. Reengineering. I call this an improved. and asked us what their next steps should be. Implementing a different buzzword (Total Quality. One of the organizations we consulted with started on this path. One organization we worked with had over 70 quality improvement teams in a plan with only 300 employees. expected results or return on investment. there are hundreds. These buzzwords are often a hammer in search of a nail. A company President. otherwise known as MBS (Management by Best Seller). whether they be called Total Quality Management. Their initial quality improvement teams may be so successful they rapidly create more teams.) every few months often creates a “whipsaw” effect that causes mass confusion among your employees. Many employee became discouraged with the process and considered it just another management fad. Others change the techniques they use every few months. They had shown little results after their first successes. with a hundred opportunities and pitfalls passing by every moment. With the next business downturn. Re-engineering or Teambuilding. CEO or business owner has so many choices in these buzzwords. We suggested the . using the “program du’jeur” method of organizational change. etc. but there are so many brands. Just in Time. This caused tremendous excitement in the organization. sizes and varieties you don’t know what to buy. PhD Perhaps the most asked but least answered question in business today is “What can we do to make our business survive and grow?” The world is rapidly changing into something too hard to easily predict. occasionally inappropriate and sometimes not there. the follow-through was delayed.

There are four levels of organizational change: shaping and anticipating the future (level 1) defining what business(es) to be in and their "core competencies” (level 2) reengineering processes (level 3) incrementally improving processes (level 4) First let's describe these levels. partly because of its poor productivity.defining what business(es) to be in and their "Core Competencies Many attempts at strategic planning start at this level. Organizations must first decide on the framework their organizational change long before they choose a buzzword to implement. defines opportunities based on these possible futures. organizations start out with few assumptions about the business itself. In response to this problem. They were not interested in taking any of these actions. Level 1. goals and strategies Measurement system Sequence of steps Implementation and organizational change The levels of organizational change Perhaps the most difficult decision to make is at what "level" to start. look at restructuring their organization along more product-focused lines. and possibly start profit sharing. assesses its strengths and weaknesses in these scenarios changes its mission. or 3) management doesn't know where else to start. and what the future will be like. The major decisions Instead of grasping for the latest technique. A few months later. 2) the future is embodied in the CEO's "vision for the future". 4) management is too afraid to start at level 1 because of . this article will provide you a framework for coping with organizational change independent of buzzwords or the latest management fad." Level 2 . I suggest instead that organizations should go through a formal decision-making process that has four major components: Levels.union’s leadership in their efforts. and then under what circumstances a business should use them.shaping and anticipating the future At this level. measurement system etc. Organizations need to move beyond the buzzwords into deciding what actions they need to perform that will help them grow and develop. "Moving from the Future to your Strategy. either assuming that 1) the future will be like the past or at least predictable. Management generates alternate "scenarios" of the future. what it is "good" at. its parent company shut down the site. More information on this is in the next article.

The teams management formed reduced initial quality defects by 48%. an organization can then define its measures. making improvements on how a buggy whip for horse-drawn carriages is made will rarely come up with the idea that buggy whips are no longer necessary because cars have been invented. using incremental approaches can be frustrating to employees and management if (pick a buzzword) does not catch on in the organization. they differ substantially in the methods they use to achieve these goals. etc.Reengineering (Structurally Changing) Your Processes Either as an aftermath or consequence of level one or two work or as an independent action. Levels one through three. and had them focus on specific technical problems. The disadvantages of such an incremental approach include avoiding structural. goals. system-wide problems. often with considerable effect. and assumes existing processes need modest improvement. strategies. please see "A Tale of Three Villages. out-sourcing. In addition. greater employee productivity." Level 4 . reengineering focuses on making major structural changes to everyday with the goal of substantially improving productivity. weaknesses. level three work focuses on fundamentally changing how work is accomplished. quality or customer satisfaction. "Moving from the Future to your Strategy. Oftentimes organizations put in considerable effort into getting every employee focused on making these small changes. opportunities and threats) analysis is completed." Level 3 . efficiency. . Despite these similarities. To read more about level 3 organizational changes. As a result of these disadvantages. To read more about level 4 organizational changes and how it compares to level 3. on one hand. More information on this is in the next article. Rather than focus on modest improvements. After a mission has been defined and a SWOT (strengths. purchase/sale of subsidiaries. Unfortunately." One organization we consulted with has had a more positive experience with the incremental approach. or 5) the only mandate they have is to refine what mission already exists.the changes needed to really meet future requirements. We trained an internal facilitator. etc. focuses on "big picture" elements such as analysis of the marketplace. helped them deliver training in a just-in-time fashion. please see "A Tale of Three Villages. many organizations experience a high risk of failure in the long run.Incrementally Changing your Processes Level 4 organizational changes are focusing in making many small changes to existing work processes. What level do I choose? These levels have much of the same goals: increasing customer satisfaction. doing things right the first time.

As a result. One must carefully observe their actions. IBM in the mid 1980’s felt that the future would be much like the past and a result didn't have to change much. or making major changes in how the everyday employee is being paid. re-organizing by customer instead of by function.truly out-of-the box" thinking and substantial change in the management and support systems of the company . however. management may come to realize how much change is necessary. Types of industries include those whose environment requires rapid adaptation to fast-moving events: electronics. they are using level 3 methods. companies that use these methods tend to have a high need for change. The key. has many constraints on its actions and only has a modest consensus among themselves on what to do. This decision is very important. they wish to hone and clarify what they already do. This belief often hinges on their often unassessed beliefs of 1) how well the organization performs compared to other organizations (a lack of benchmarking). my recommendation is that organizations conduct scenario/strategic planning exercises (level 1) anyway. is to note what changes they are really making. they are using level three methods. aerospace. Those organizations whose strategic planning solely focuses on refining an existing mission statement and communicating the paragraph also fall into using incremental (level 4) methods. Instead of focusing on new opportunities. Unfortunately. for example. relatively few constraints and have substantial consensus among its management on what to do. risk-tolerant management. information systems and telecommunication industries. and greater restructuring is necessary. all of this discussion hinges in management's belief about how much change is necessary. This way management can be aware of the limitations of the lowerlevel methods they are using and realize when it is best to abandon these lower-level methods for something more substantive. even if they have already decided that level 4 (incremental) methods will suffice to solve their problems. incremental change. Companies using mostly incremental tools (level 4) have management that perceives only a modest need for change. Types of industries that often use these methods include the military. health care organizations. "glitter" recognition programs and large budgets to provide "awareness" training in the buzzword they are attempting to implement. They did not realize how much microcomputers would replace the functions of their . Based on this exercise. comparison of existing internal processes with worldclass examples (benchmarking) and market analysis. its important to realize that what labels companies use are not important here. If management is mostly filling training slots with disinterested workers and forming a few process improvement teams. the more it suggests that greater change is necessary. and until recently. Many companies have slogans. If they are considering changes in business lines. The greater the gap between what the organization needs to be and how it currently operations and what businesses it is in. and 2) what the future will be. When discussing the continuum of structural vs. is relatively risk-avoidant. In my experience.

” .The goal is both possible and is done at the right time with sufficient attention and resources Realistic. “What gets measured gets improved. Some examples include: “We will re-engineer our research and development process” “We will evaluate and improve our sales and marketing department” We will conduct a SWOT analysis and then define our core competencies Additional examples of strategies are included in the "Moving from the Future to your Strategy" chapter. Some examples include: “We will expand into the polystyrene market within the next five years and achieve 20% market share” We will decrease the time from research to customer delivery by 50% within two years We will increase the quality of our largest product by 20% in three years. the mainframe.concrete action. the organization does not know if it has succeeded in its efforts. The Measurement System Without measures of success. Wait a second. They are in one sense as they both need to be SMART. goals need to have the resources and management determination to see to their success. step-by-step actions needed to make the goal succeed Measurable . Aren't goals and strategies really the same. any road will get you there.observable results from the goal's accomplishment Attainable . The net result was tens of thousands of people were laid off. with the company suffering the first losses in its history.” Someone else said. that is: Specific . “If you don’t know where you are going. Someone once said. Strategies Where goals focus on what. As what you might guess. Goals also need to be SMART. In addition.The probability of success is good. Time-bound. Goals Based on whatever level work you are doing. the opportunities that are found need to be evaluated to determine which of them best suit the existing and future capabilities of the organization and provide the most "bang for the buck" in terms of improvement in your measures of success.bread-and-butter business.The goal is achieved within a specified period of time in a way that takes advantage of the opportunity before it passes you by. strategies focus on how. given the resources and attention given it. the goals of a level are achieved by creating strategies at the lower levels.

Ford Motor Company is currently restructuring its entire organization. The first involves the entire organization from the start. There are four basic options.For more information on measurement systems and their place in organizational change. This option can often become an incremental approach like the first or second village. Another option is a more relaxed approach. in which divisions or business units of the organization go at their own pace. Many aerospace organizations have used this approach. Such employee involvement. which is always a very important factor in the success of any organizational change. Unisys. please see the "Balanced Scorecard" article. might also be threatening to management’s traditional power. Such organizations as Eaton. if one variable equals 0. where they have significant influence in the strategic plan of the organization. along with a number of articles where employee surveys are used. In this case. Many conglomerates or other companies with diverse operations try this approach. a high value of one variable can compensate for lower levels on other variables. with the focus being on individual business units doing the implementation. moving from planning to implementation in nine months. the result is zero. A third option is similar to the previous one. the computer company. Implementation and Organizational Change The success of any organizational change effort can be summed into an equation: Success = Measurement X Method X Control X Focused Persistence X Consensus Like any equation with multiplication. or further limit involvement to purely task-focused teams working on technical problems. This kind of involvement tends to reduce employees’ resistance. with the whole organization intensively working at once on making the change. A fourth option is to create a pilot project in one division or business unit. good project management and the sequence of implementation The sequence of implementation is also an important factor. and then apply those lessons to the rest of the . business units implement roughly the same things in roughly the same time schedule. On employee involvement Some organizations involve employees right from the start. learn from its mistakes. however. Focused persistence. Also like any equation with multiplication. with many variations of them. Eastman Chemical and Rohm and Haas have used such an approach. is using this method on some of its organizational change efforts. however. Some organizations decide employee involvement will be limited to implementing the strategic decisions management makes.

Examples of this option include the Saturn car facility at General Motors and the Enfield plant of Digital Equipment Corporation.organization. the lessons learned from these pilot projects have not gained widespread acceptance in their parent companies due to their heavily ingrained cultures . It’s important to note here that creating pilot projects is a high-risk business. In both cases.

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