What Changes - and What Doesn't ?: A Multiple Perspective Approach

Managing Organizational Change
A Multiple Perspective Approach

Third Edition
Chapter 5
What
Changes –
and What
Doesn’t ?
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution

without the prior written consent of McGraw-Hill Education. 5-1
Learning Objectives
• What Changes?
• Innovation
• Organizational Culture
• Technology
– The impact of digitalization
– Applications of social media

What Changes? Types of change
• ‘Anything and everything’, but often factors such as strategy,
structure, technology, systems and procedures, human
resource management practices, internal and external
relationships, leadership style, and culture
• There are several ways in which the content or the substance
of change can be categorized. A range of concepts used to
describe the nature of change (Table 5.3 page 165)
1. Planned and emergent changes
2. Incremental and transformational change
3. First-order, second-order and third-order change
What changes? There are different kinds and degrees of innovation.
The challenge for the change manager is to determine which (or
which combination) is appropriate to a particular organization at a
given time. As Kodak’s experience suggests, reaching that
assessment involves judgment and intuition as well as data.
What Changes?
Planned changes: are those that are implemented in

anticipation of, or in response to, known trends and
developments. For example Changes in motor vehicle
engine design and manufacturing methods (technology,
materials, and working practices) are likely to be prompted
by changes in legislation regulating carbon emissions.
Emergent changes: are those that just happen, or have
to happen, in response to unforeseen events, such as the
sudden opening of new market opportunities, or accidents
and failures, or major geopolitical developments. It is
difficult to plan ahead for those events in other than very
general terms. It is possible to argue that emergent
change is now more common, given the complex, fluid,
and unpredictable nature of the environment in which most
if not all of our organizations are operating.
What Changes?
• Incremental change: which is gradual and

small scale
• Transformational change: which is radical and
groundbreaking, and can often be rapid.
Organizational change up to the mid-twentieth century was

typically incremental and infrequent, and that from the late
twentieth century to the present, change has become more
common and traumatic. However, radical, transformational
change is not new, but was also a feature of the first half of the
twentieth century—if not before. But, there is a more important
question here: is too much attention now lavished on large-scale
transformational change, while the role of small-scale changes is
overlooked?

What Changes?
First-order change: involves a specific initiative that solves a

problem, and/or makes improvements, in ways that do not present a
challenge to current methods and thinking. It is adaptive and implies a
degree of continuity and order. This is captured in the expression,
“change to stay the same”. Example: The incorporation of a growing
range of safety features in motor vehicles—from seat belts to electronic
proximity sensors—is a series of first-order changes that improve the
product without making any major changes to it.
Second-order change: leads to organizational transformation,
by introducing new products, services, and ways of doing business, based
on creative lateral thinking that alters current core assumptions. It is
disruptive and discontinuous, and is captured in the expression, “move to
get to a new position”. Example: The development of electric-powered
self-driving motorcars, made by companies that are not considered to be
in the automotive sector.

What Changes?
Third-order change:
the habitual questioning of
assumptions and points of view, contributing to what can
be a chaotic process of continual adaptation, self-renewal,
and self-organization. What will come after electric and
driverless cars, and “phone app taxi services”? Walmart
and other retail supermarkets sell motorcars thus
threatening established dealer networks. Given current
global trends in house prices, will property developers and
real estate agents offer discounted or free motorcars with
house and apartment purchases as an inducement to
customers? Will we continue to own cars anyway, or hire
them when we need them, ordering them by iPhone?
These developments, and others more difficult to predict,
are examples of third-order change that, in some
sectors, could become the norm.
What Changes?
• Depth of change (Table 5.1 page 143): is another

metaphor that can be used to categorize different types of
change.
• At the bottom of this figure sits the “small stuff” that may not
even be regarded as “change.” Mid-scale includes “sustaining
innovation,” which involves improving on current practices. At
the top of the scale is “disruptive innovation,” which
involves radically new business models and working methods.
• Incremental and first-order change (shallow, sustaining),
second-order or transformational change (deep, strategic),
or third- order change (off the scale, disruptive) on this
scale.
• The depth metaphor simply provides a richer picture of the
patterns of change that we are likely to see in most
organizations.
Change manager implications
The practical change management implications of these categories:
First: Match the type of change (e.g., incremental, second-
order, etc. ) to the problem.
 Simple problems that are well understood can usually be resolved with simple,
shallow, incremental changes.
 Addressing fundamental strategic opportunities and threats with fine-tuning,
however, will typically lead to disappointment.
Second: identify the nature of the change management
task:
 The management of shallow change typically requires less management
capability and fewer resources than implementing frame-breaking initiatives.
 The former are likely to involve few departures from the familiar, may be
relatively low in both cost and perceived risk, and pose little threat to the
status quo with which people are comfortable.
 deep, disruptive, or “off the scale” change is often abrupt, painful, risky, and
expensive and can stimulate stronger and more widespread resistance,
potentially creating a major management challenge.

Change manager implications
The practical change management implications of these categories:
Third: Linking involvement in change to personal
reputations and careers
 Change management experience and capability have become “core selection factors” for
candidates seeking promoted positions in many organizations.
 Candidates who can answer those interview questions with accounts of the deep
changes in which they have played a role are more likely to be preferred to those whose
previous roles have involved them in only shallow, incremental initiatives.
 Deeper changes can often be driven as much by personal career motives as by
corporate need.
 Assess the profile of changes in which you are currently engaged. If this involves
shallow initiatives, explore how you can become involved with, or personally generate,
deep changes that you can then discuss at the next job or promotion interview
Fourth: Co-ordinate activities to avoid duplication,
overlap and unnecessary cost
 many organizations have set up corporate program management offices
(PMOs) to support and coordinate their initiatives.
 coordinating a wide portfolio of change through a program management
office
Some implications flowing from these concepts and links to
images of managing change are shown in the following table
Implication for Change Manager Image of Managing Change

Care needs to be taken in assuming that Interpreter: reminds us that whether a change is
types of organizational changes can be adaptive, reactive, or transforming will depend
neatly categorized as small, adaptive, and upon the perspective of the person doing the
incremental compared to those that are
considering—and part of the role of the manager
large and transformational
of change is to mold these perspectives or
A restructure in one section of an
organization may be seen as small scale provide “sense making” for organizational
and adaptive by people elsewhere in the participants about “what is going on here.
organization who are relatively unaffected
by it.
Multiple types of changes simultaneously Navigator: When implementing multiple changes,
should also be considered. In addition, there is likely to be contact with different groups,
some changes require other changes interests, and power relationships within their
nested under them in order for another
change to proceed
organization that will require negotiation and
navigation through a range of issues—not all of
Individually, each change may be seen to
be achievable and relatively small scale which they will be able to control.
(depending upon your perspective), but
together they may be seen as
transformational, even revolutionary


From chaos theory, we know that Nurturer: Change managers can nurture and
small changes, at an individual level, shape people’s perceptions and reactions to
may have larger, unanticipated change but not control them. What might seem to
consequences throughout the be a small, inconsequential change may have
organization radical consequences that change managers may
not be able to anticipate
There are a number of inertial forces Coach: the managers of change are likely to
that act as a drag on individuals and assume that, as long as people have been well
organizations in adopting adaptive, “coached” in a variety of organizational and team
first-order change skills, then, when organizational “problems” are
Providing the conditions for the triggered, they will take the initiative and make
exercise of personal initiative appropriate adaptive changes to alter
becomes an important focus for organizational practices and routines.
change managers who wish to
cultivate change through the exercise
of frontline staff

Change managers need to remember Director: Change managers who adopt a
what might appear at first sight to be a directing image of change also need to remember
paradox, that often change is needed that they will need to provide directions about
in order to remain stable. This can be stability: telling people what will not be changing,
seen as another way of framing the or what will remain the same.
fundamental paradox of stability and What this reminds the managers of change is that
change where change may be needed they need to assess how carrying out a change
to preserve or re-establish stability and will impact upon current practices.
stability must include change For the manager of change, this requires both
mechanisms to be adaptable. assessing the scale of change
Change may mean adding on to, and (incremental/radical) from the perspective of the
integrating, rather than removing and affected parties as well as assessing the risk
replacing current practices involved (of changing rather than staying the
There is often an implicit assumption same) and the different ways in which risk can be
that incremental, adaptive changes ameliorated.
are less risky than large, second-order
transformational changes.
An alternative position is that staying
the same is risky

Innovation
• Innovation is a key driver of change (e.g., new products,
ways to organize, better working practices, and new ways to
provide services)
• Innovation is the adoption of any product, system, process,
program, service, or business model new to this organization.
An idea may have developed elsewhere, but it can be seen as
an innovation here.
• Different kinds of innovation: Product innovation and
operational innovation (finding new ways to lead, organize,
work, motivate, and manage) Toyota’s Lean production system
• Sustaining innovations (improve existing products and processes:
a more fuel-efficient motorcar) and disruptive innovations
(introduce wholly new processes and services, such as an all-electric
motorcar or social networking or Dell Computers’ “build to order”
business model). The business model developed by the online retailer
Amazon has disrupted the traditional retailing sector while changing our
shopping habits. Digital photography too
Challenges for the Change Manager
• Operational innovations can be more difficult to implement than
product innovations.
• Potential users can see and touch a new product—a smartphone, for
example—and they can try it out for themselves.
• An operational innovation, however, has to be implemented before anyone
can really see how it is going to work—a streamlined process that will
reduce time to market.
• The benefits can take time to appear, particularly when the initial
specification has to be adjusted with experience.
• Convincing others of the value of an operational innovation, therefore, is
not always straightforward.
• Operations are not as easily understood, as deal-making or new technology
and are therefore not regarded as a source of competitive advantage.
• A further problem is that the “ownership” of an operational innovation may
be vague, because it crosses functional boundaries.
• Rogers (1995) observed that adoption of innovations follows a pattern
(Table 5.1 page 148).

Challenges for the Change Manager
• Disruptive innovations can be more difficult to implement than
sustaining innovations, as they are often viewed as risky.
• Disruptive products and services are often not as good as those in current
use. The service provided by the low-cost business model of Southwest
Airlines may not be as good as that of conventional carriers, but is simpler,
more accessible, and cheaper. The quality of images produced by the first
digital cameras was much poorer than that from film cameras.
• Most organizations have no routine processes for dealing with disruptive
innovations. Disruptive innovations are thus often introduced by smaller
new entrants or start-ups in a sector, rather than by the older, larger, and
dominant incumbents.
• In contrast with disruptive innovations, it is easier to convince others of the
value of sustaining innovations, which make existing processes, products,
and services work better.
• It is difficult to demonstrate these properties with disruptive innovations—
which can be difficult to understand, cannot be observed and tested, and
cannot be compared with current practice until after they have been
implemented.

Change Manager as Disruptive Innovator
• What advice is there for the change manager

seeking to develop and implement disruptive
innovations to their organization?
• Disruptive Innovators use the five habits shown
in table 5.2. page 150
– Associating
– Questioning
– Observing
– Experimenting
– Networking

In Defense of Sustaining Innovation
It would be a mistake to think that transformational, disruptive

innovation is the solution to most current organizational problems
for two reasons:
• First, considerable business benefit can be achieved through
small-scale initiatives and sustaining innovations. Many healthcare
organizations have imported “lean” techniques from manufacturing
and made significant performance improvements that benefit
patients, staff, and the organization as a whole.
• Second, many organizations have highly profitable businesses
based on traditional products, such as Swiss watches. Some
traditional technologies, having once been overtaken by innovative
replacements, have reemerged. New technology does not simply
displace old technology. The appeal of some old technologies is
enduring (sailing boats, paper books), and some items are bought
for their aesthetic value, regardless of price

Organizational Culture
• The shared values, beliefs, and norms that influence the way
employees think, feel, and act.
• walk into a McDonald’s restaurant and note the atmosphere,
décor, lighting, attitude of staff to customers, style and
variety of food and drinks, speed of service, cost, and any
other details that catch your attention.
• Organizational culture can have very positive or very negative
effects on organizational effectiveness (e.g., NASA Columbia
Space Shuttle, BP Deepwater Horizon) so it is a common focus
of organizational change initiatives.
• Culture change occurs indirectly, i.e., through changes to
‘surrounding structures’ (e.g., reward and recognition
systems) and managers must be seen to be modelling the
advocated behaviour or lost credibility undermines the change
process.

Organizational culture is important because it:
1. shapes the public image of an organization;
2. influences organizational effectiveness;
3. provides direction for the company;
4. helps to attract, retain, and motivate staff.
Ineffective organizational culture can be the cause of many problems:
5. Falling sales
6. Customer complaints
7. Staff absenteeism and turnover
8. Poor public reputation
Failure to manage organizational culture costs lives, reputations,
careers—and money, affecting the wider community and the
economy as well as causing internal organizational damage
It is therefore not surprising that culture change programs have become
popular.
There is a distinction between strong and weak organizational
cultures:
• A strong culture is one in which the organization’s values
are widely shared and intensely held, and which thus guide
behavior. Strong cultures thus suggest emotional attachment
and commitment to an organization, unity in approach.
Companies with strong cultures perform better. Strong
cultures can lead to inappropriate behaviors, encourage
conformity, complacency, and inertia, and take time to
develop and change.
• A weak culture displays little agreement about core values

or about expected behaviors. Organizational culture can cause
serious problems. NASA and the oil exploration company BP
provide iconic examples of what can happen when culture
goes wrong.
Changing an organizational culture
• Changing an organizational culture is in many respects similar
to managing any other form of change. However, culture is
usually defined in terms of shared values, beliefs, and norms.
Those are attributes of individuals and groups that are difficult
to change directly.
• Most approaches to culture change thus advocate action to
change behavior, through new working practices, systems,
and human resource policies. This approach assumes that,
once the benefits of those new behaviors become clear, the
values, beliefs, and norms that reinforce those behaviors will
adjust naturally.
• Culture change programs often target staff engagement,
teamwork and collaboration, and information sharing and
creativity, as well as costs, revenues, and customer service.

Changing an organizational culture
Success of change relies on persuading individuals to change
their “mindsets”—to think differently about their jobs and how
they work. This first involves changing behavior. They identify
three levels of change:
• First, some outcomes (increasing revenue) can be achieved
without changing working practices (selling noncore assets).
• Second, staff can be asked to change working practices in
line with current thinking (finding ways to reduce waste).
• The third level involves fundamental changes in
organizational culture, in collective thinking and behavior—
from reactive to proactive, hierarchical to collegial, inward-
looking to externally focused.

Technology
• Developments in technology in general, and in information and
computing technology in particular, have long-running and
ongoing implications for organizational change management.
• Some developments have created disruptive innovation (online
business models), while others have improved the productivity
of individuals (word processing).
• Technological change appears to be rapid and relentless. In
the rush to implement new technology and to gain benefits ahead
of competitors, there may be little time to consider the social
system design before the next development appears. This presents
a challenge for the change manager:
 it may be necessary to maintain the pace of technology change.
 it will be helpful to ensure that the organization of the work of
those who will operate new systems strengthens the staff
capabilities, motives, and commitment that contribute to effective
operation.
Good sociotechnical design is still at a premium
Technology: the impact of
digitalization
• Digital technologies are “profoundly changing the strategic context:
altering the structure of competition, the conduct of business, and,
ultimately, performance across industries.” Emphasizing that
digitization is a “moving target,” they identify three strategic
opportunities:
– Enhancing interaction:between customers, suppliers,
employees, and other stakeholders, as consumers come to prefer
tailored, mixed-media, digital online communication channels
– Improving management decisions:by processing “big
data” and information from “the Internet of Things,” and thus being able
to refine (personalize) marketing allocations and reduce operational risks
by sensing equipment breakdowns
– Creating new business models:such as crowdsourcing
product development and peer-to-peer customer service

digitalization
• These developments can drive down prices, as customers can
instantly compare prices and rapidly switch to other sellers
and brands. Digitization lowers the entry barriers to start-ups in
many areas, and established organizations will face competition
from unexpected areas (such as food retailers offering financial
services that compete with banks).
• Those employees who are displaced by digitization, as more
processes (administrative and manufacturing) become automated,
may not have the capabilities that will enable them to find
employment in the more highly skilled jobs that remain.
• The crowdsourcing website WhoCanFixMyCar.com may disrupt the
motorcar repair business by connecting drivers needing repairs
with mechanics looking for work

digitalization
• Constraints on organizations’ capability to respond to
opportunities:
– problems finding staff with digital skills such as analytics,
online development, project management, cloud computing, joint business
enterprise, and cybersecurity
– unsuitable organizational structures
– inflexible business processes
– lack of good quality information
– lack of an ‘experimental mindset’
To remain competitive, therefore, many organizations may be compelled to
adopt a version of Lego’s pattern of rapid experimentation and innovation.
The change management challenge will be to develop that approach,
implementing appropriate changes to structures, processes, and
information systems, and developing “experimentation”
organizational cultures. Investment in training and development may
be required to fill the skills gap. Further change management challenges
will involve identifying opportunities, moving quickly to explore benefits,
and dropping unsuccessful experiments
Technology: applications of social media
• Social media seem to have many applications with regard to

communications, staff engagement, recruitment, and
learning.
• These tools could thus offer platforms for developing more open,
communicative, egalitarian, collaborative, and responsive
cultures.
• organizations have been slow to respond to these opportunities, and
we may be in an “experiment and learn” phase. This context puts a
premium on the coach, interpreter, and navigator images of change
management.
• These applications allow a much higher degree of participation and
interaction, between systems and users, and between users
• Social media are thus radically changing the ways in which we
interact with each other, develop our relationships, share
experiences, and form opinions. These networking tools have also
changed the ways in which organizations interact with and gather
information about their customers.
• Social media allow consumers to share opinions of brands to

a wider audience than word of mouth can reach.
• Consumers are therefore “hyper-informed” when making
purchasing decisions.
• Customer service is also being transformed, with half of U.S.
customers using social media to raise complaints or ask
questions
• Social media could be central in encouraging more open,
communicative, egalitarian, collaborative, and responsive
organizational cultures.
• Organizations must be sensitive to these trends and respond
accordingly

Social media have three valuable properties:

• First; They provide “multidirectional” flows of information
between friends, colleagues, organizations, and
management, compared with the static “one-way”
communication from conventional web pages
• Second: They allow users to develop new connections,
encouraging collaboration across boundaries such as
organizational silos
• Third: These are “low friction” tools; they are attractive,
pervasive, easy to use, and no specialized equipment is
required

• Change challenges:
– Finding ways to use digitalization to achieve
organizational goals
– Finding the best fit between new digital
technologies and the social system of
organizations
– Designing effective sociotechnical systems
incorporating social media
Addressing these challenges in a context of rapid

development involves experimentation, and some
experiments will be unsuccessful.


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Managing Organizational Change

A Multiple Perspective Approach

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution

Planned changes: are those that are implemented in

• Incremental change: which is gradual and

Organizational change up to the mid-twentieth century was

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution

First-order change: involves a specific initiative that solves a

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution

• Depth of change (Table 5.1 page 143): is another

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution

Implication for Change Manager Image of Managing Change

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution

Implication for Change Manager Image of Managing Change

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution

• What advice is there for the change manager

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution

It would be a mistake to think that transformational, disruptive

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution

• A weak culture displays little agreement about core values

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution

• Social media seem to have many applications with regard to

• Social media allow consumers to share opinions of brands to

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution

Social media have three valuable properties:

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Addressing these challenges in a context of rapid

Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution

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