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Food for thought

Corporate revitalization often includes shifts in strategy or process or structure, but revitalization means a good deal more—it means a permanent rekindling of individual creativity and responsibility, a lasting transformation of the company’s internal and external relationships, an honest-to-God change in human behavior on the job…

Where We Are
Introduction & overview Strategies of change & conclusion EIS Simulation: The change process

Leadership & Initiation of change

Individual level: Change agent

Organization level: Culture & structure

Interpersonal level: Social capital

Session 5

Managing Change at the Organizational Level

cultural change Summary and takeaways . bottom-up – Empowerment as a strategy • Theme 2: Organizational change through structural design – – – – The role of structural designs in organizational change Case study: Appex Corporation Debate: structural change vs.Topics for Today • Theme 1: Organizational change through empowerment – Strategic consideration: top-down vs.

.Theme 1: Organizational change through the management of culture • The need to get people involved – The key is to change the mental model • Organizational culture – values and norms that are shared by people/groups that control the way they act internally and externally. – Values = beliefs about goals and appropriate standards for achievement (behaviors) – Norms = expectations about behavior in specific situations and toward one another.

goals .serve a normative or moral function to guide members in certain situations and in socializing members. managers) that the group adopts through validation (cognitive transformation to shared value) – conscious and explicit .philosophies . – Strategies .Organizational Culture • Espoused Values – individual values (CEO.

Organizational Culture • Basic underlying assumptions: – a solution to a problem that works repeatedly & becomes taken for granted – cannot be confronted or debated and are difficult (if not impossible) to change. – individuals will distort or deny rather than adopt thus culture at this level is a defense mechanism – so…major change means managing at this level. . – can only be changed through re-examination and re-evaluation of the cognitive structure.

does not value initiative & may discourage . etc. people learn the culture – Consists of stories.encourage and reward initiative/innovativeness .Organizational Culture – Socialization .cautious and conservative. • influence of the founder • organizational structure • composition of TMT – Adaptive cultures . legends.easiest to change… – Inert cultures .

sticks to knitting. risk-taking. close to customers – Structured for flexibility .autonomy.Organizational Culture • Strong Adaptive Cultures characterized by: – Bias for action . entrepreneurship – Coherent mission .

motivating – It is resocialization—changes the way people think • Leading from a different place – Out of the comfort zone – Generate a sense of urgency. . maintain healthy levels of stress. • Instilling mental disciplines – Let employees see the larger picture – Manage from the future – Cerate relentless discomfort with the status quo. 2000) • Incorporating employees in the process – Not communicating.Changing organizational culture (Pascale et al. resist coming to the rescue with ready answers.

it opens the possibility of making mistakes. then individuals became disenchanted with their new ways of thinking.Empowerment (Quinn and Spreitzer 1997) • Empowered people have a sense of – Self-determination – Meaning – Competence – Impact ―Because empowerment includes risk-taking. p. and regressed to past behaviors. If those mistakes were punished.‖ Quinn and Spreitzer (1997. then the cycle of empowerment was halted and individuals actually felt more disempowered than before. 45) . If they received no support or reinforcement.

and what can I do to increase it? • To what extent do I have a sense of impact.Are you empowered? (Quinn and Spreitzer 1997) • To what extent do I have a sense of meaning and task alignment. and what can I do to increase it? • To what extent do I have a sense of self-determination and choice. and what can I do to increase it? . and power. influence. and what can I do to increase it? • To what extent do I have a sense of competence and confidence to execute my work.

Debate: Change from top-down or bottom-up? .

predictability • Types of organizational structures . resources  vested interests generates stability.Theme 2: Organizational change through structural design • Strategic design and organizational control • The role of structure in organizational change – – – – Structure Structure Structure Structure and organizational alignment  power.

Organizational Structure • Functional structure .groups people on the basis of common expertise & resources • Pro: learning (transfer of knowledge within function) monitoring is easier processes become more efficient greater managerial control control becomes a problem as company grows communication and coordination (between functions) measurement (contribution of function) loss of strategic focus by TMT • Con: .


time for TMT to focus on strategy Growth .Multi-Divisional Structure – Product lines or business unit is self-contained corporate HQ established for support & control • Divisional unit = operating authority • HQ = strategic authority – Adv: Financial control .add businesses or products Internal efficiency .easier to monitor Strategic control .allows clearer variance identification Division/Corporate relationship Interdivisional competition .resources. parent attention Short-term focus Bureaucratic costs – Disadvantages: – – – – .

Multi-Divisional Structures .

professional. & perform best in autonomous.Matrix Organization – Based on two forms of horizontal differentiation: functional and project/product – Advantages: – – – – – – Employees tend to be highly qualified. flexible working conditions Employees can be moved from project to project leaves TMT to focus on strategy high bureaucratic costs constant movement of employees means $ two boss role can create conflict – Disadvantages: .

Matrix Structure .

Team Structure • Many companies use permanent crossfunctional teams • formed at the beginning of product development process and continued throughout implementation • speeds innovation and customer responsiveness • stronger in highly dynamic industries .

Team Structure .

Network Organizations • Core group of experts manages the outsourcing process closely • This forms a hub & spoke type of organization consisting of many contracts • Could create a control problem with contract organizations • Example: Nike .

Network Structure . .

Case study: Appex Corporation .

project-based Loosely structured Organizational culture: informal • Challenges: – Growing pains: consider Greiner’s 5 stages of growth – From innovation to sustainable growth .Background • Shikhar Ghosh – expertise in structural design • Appex before Shikhar: – – – – – Small size: 20 employees. Entrepreneurial Technology-driven. $2mil.

The Five Phases of Growth Larry Greiner .

The search for structural fit • Circular structure – What kinds of problems does it run into? • Horizontal structure – Why does it not work for Appex at this stage? • Hierarchical. functional structure – Does it address the challenges? Why? • Divisional structure – What is the rationale? Does it work? .

Questions for discussion • Is ―structure and control‖ the most important aspect for organizational change at this stage of Appex’s development? • How do you evaluate the effectiveness of the different structures adopted at Appex over time? • Would you do anything differently? • What is the relationship between organizational structure and culture? • The lessons from Citibank practice in Taiwan .

culture as control device – Strategic design in culture. reliable and fast information implementation. personalization – Examples: IBM versus 3M – Codification: Provide high-quality. – Personalization: Provide creative. strategy. and Tierney 1999) • Two strategies: codification vs. • The trade-off between professionalization and bureaucratization • Implications: – structure vs. HRM . Nohria.Strategic choice in knowledge management (Hansen. analytically rigorous advice on high-level strategic problems.

structural changes – Complementality between the two – The need for a systematic change program – What is your priority? . • Strategic choices for change: Cultural vs.Summary and takeaways • Strategic choices for change: Top-down versus bottomup – Leadership and the initiation of change – Empowerment: Organizational changes need bottom-up processes that involve employees and change their mindsets.