Chapter 14

Organizational
Change and
Development
Michael A. Hitt
C. Chet Miller
Adrienne Colella

Slides by Ralph R. Braithwaite

14-1
 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?

Dawn Pinaud
Exploring Behavior in Action 14-2
 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?

14-3
 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.
14-4
 Pressures for Change
Life-Cycle
Aspirations
Forces

Growing
Technological
International
Advances
Interdependence
Pressure for
Change
Introduction
or Removal of Changes in
Government Demographics
Regulations
Shifting
Changes in
Political
Societal Values
Dynamics

Adapted from Exhibit 14-1: Internal and External Pressures for Organizational Change 14-5
 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

14-6
 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.

14-7
 Integrative Life-Cycle Model
Entrepreneurial
Stage

Need for stability

Collectivity and structure
Need for Stage
additional
people
Formalization and
Control Stage
Need for
balance
Elaboration
Stage

Adapted from Exhibit 14-2: Integrative Life-Cycle Model 14-8

External Pressures for Change
Technological Shifting political
advances dynamics

Introduction and
Changes in
removal of government
demographics
regulations

Changes in Growing international

societal values interdependence

14-9
 Companies’ Responses
Managerial
to Pressures for “Green”
Advice
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?

14-10
 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

14-11
 Process of Planned Change
Kurt Lewin

Unfreezing Moving Refreezing

• Provide rationale • Provide information • Implement new

for change that suspects evaluation systems
• Create minor proposed changes • Create minor levels
levels of • Bring about actual of guilt/anxiety about
guilt/anxiety about shifts in behavior not changing
not changing • Implement new
• Create sense of hiring and promotion
psychological systems
safety concerning
change
Adapted from Exhibit 14-3: Process of Planned Change 14-12
 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
14-13
Strategic OB
 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 Informal Credibility

Expertise Proven Leadership

John Kotter
14-14
 Speed of Change

Urgency
Degree of support

Criteria to Amount and complexity of change

Consider Competitive environment

Knowledge and skills available

Financial and other resources

14-15
 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:

Referent and
Degree of
Urgency Expert Power
Support
of Leaders

14-16
 Resistance to Change
Effort to block new
ways of doing things

Four Factors

Lack of Different
understanding assessments

Self-interest Low tolerance

for change

14-17
 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?
Willie Walsh
What other changes would you recommend at
this time?

Experiencing
14-18
Strategic OB
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

14-19
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

14-20
 Basic Organization Development
Model
Diagnosis of
Situation

Introduction of
Feedback
interventions

Progress
Monitoring

Adapted from Exhibit 14-4: Basic Organization Development Model 14-21

 Organization Development
Interventions
Organization
Development

Relationship Techniques Structural Techniques

Job Redesign
T-group Training
Management by Objectives
Team Building
Supplemental Organizational
Survey Feedback
Processes

Adapted from Exhibit 14-5: Organization Development Interventions

14-22
Relationship Techniques

T-group Training

Team Building

Survey Feedback

14-23
 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.

14-24
 Structural
Job Redesign
Techniques

Management by
Objectives (MBO)

Supplemental
Organizational
Processes
14-25
 Organizational Learning

Exploitative Exploratory
Learning Learning

14-26
Organization Development
Across Cultures

Flexibility

Ethnocentric
Knowledge of
Attitude and
Specific Cultures
Stereotyping

Interpersonal
Sensitivity
14-27
 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 unit’s structure was needed, what
actions would you take to ensure that the change was
made effectively?

14-28
Questions

14-29