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Historical Perspective and

Basic Concepts of OD
What is OD?
What is OD?
OD is an ongoing, systematic process of implementing effective
organizational change.
Organization development is an effort;
(1) planned,
(2) organization-wide,
(3) managed from the top,
(4) increase organization effectiveness and health through
(5) planned interventions in the organization’s “processes,” using
behavioral-science knowledge.
Why bother?
Change at Nokia
Nokia continually
adapted to its
environment – for
a while. The
Finnish company
began as a pulp
and paper mill in
1865, then moved Courtesy National Board of Antiquities, Finland

into rubber, cable wiring, and computer monitors. In

the 1980s, Nokia executives sensed an emerging
market for wireless communication – living on islands.
Today, Nokia is the former world leader in cellular
telephones and is struggling to survive.
Nokia lost 90% of its corporate value.
What happened? What didn’t happen?
Would OD have made a difference?
In 2013, Microsoft bought Nokia’s phone division.
Comparing Nokia with Apple

Competition for market share creates a turbulent

OD provides one important set of tools for coping.
What went wrong at Nokia?
Nokia’s Bureaucracy Stifled Innovation (NY Times 11-22-10)
- Developed the first cell phone and dominated the market 1985-
- Had a smart phone before others, but cancelled it 2007
- Got complacent because of success, so lost the lead in touch
screens, software apps, and 3-D interfaces
- “stayed with its playbook too long and didn’t change with the
times” – Ali-Yrkko
- Risku’s design team offered 500 proposals to improve the
Symbian phone tech 2001-2009 but could not get even one
- “It was management by committee” – Risku (he resigned)
- The c-suite was too traditional and bureaucratic – Lolin Martins
- “the same slow-breaking cumulative disasters that befall many
successful companies…bogged down, suffocated, and squashed by
its many layers of management” – Fast Company Magazine
- Incremental improvements, not breakthrough changes
- Bought by Microsoft in 2013 for $7.2 billion.
Where did OD come from?
•Sensitivity training, T-groups, and laboratory training are all labels
for the same process, consisting of small group discussions in which
Sensitivity the primary, almost exclusive, source of information for learning is
Training the behavior of the group members themselves

•emphasis of OD is typically on the social subsystem, but both

subsystems and their interaction must be considered in any effort
Sociotechnica toward organizational change
l System

•influenced by industrial or organizational Psychology that

manifested most in the third precursor to OD, survey feedback.
Survey Industrial or organizational psychologists rely rather extensively on
Feedback questionnaires for data collection and for diagnosis and assessment
Five Stems of OD Practice
Laboratory Training

Action Research/Survey Feedback

Current Practice
Participative Management

Quality of Work Life

Strategic Change
1950 1960 1970 1980 1990 2000
Cummings & Worley 7e. (c) 2001 South-Western
College Publishing
Goals of OD
Developing a self-renewing, viable system that can organize in a
variety of ways depending on tasks

Optimizing the effectiveness of both the stable) and the temporary

systems by built-in, continuous improvement mechanisms.

Moving toward high collaboration and low competition between

nterdependent units

Reaching the point where decisions are made on the basis of

information source rather than organizational role.

Creating conditions where conflict is brought out and managed.