Module 6: Organization ChangeModule 6: Organization Change● Goal 1: Understand Big Picture of Organization Change● Forces driving organizations to change:○ Competitive environment■ Globalization■ Aggressive newcomers (Lego, Skype, U of Phoenix)■ Consolidation into bigger competitors (Disney & Pixar)■ Deregulation (airline & telephone industries)○ Internal pressures■ Eroding margins■ Pressures to grow■ Shareholder pressure/Demands for accountability○ Proliferating and rapidly changing technologies○ Changing workforce○ Political & economic changes● 8 Global Mega Trends (Patrick Schwerdtfeger):○ Productivity - productivity goes up, means less humans are needed → higher unemployment → higher inequality○ Business vs. governments - multinational businesses are now stronger than governments; businesses have the power of mobility to move their work from country to country; middle class is being “stripped out” with more use of technology; more and more concessions from governments to keep business within their countries to keep up employment levels○ The global mind/the Internet - borders are becoming more blurred; bringing together expertise from around the world○ Changing demographic - developed nations’ populations are aging;less babies, high above 65 people → strain on their resources; birth rate is dropping around the world○ Currencies and credit - our credit system will break as governments keep printing money to keep their economy sustainable; bitcoin = possible future virtual currency○ Resource depletion - commodity prices will go up; food shortages and riots → social unrest○ Global warming - big, record-breaking storms, droughts → cost our governments and insurance companies enormous amounts of money○ Biotech - one of the most exciting growth companies; demand for biotech as people are aging more ● Forces Driving Organizations to Resist Change:○ People resistances■ Habit (Liability of success)■ Difficult to learn new behaviors■ Security/economic factors■ Fear of unknown○ Organization resistances■ Strong organization culture■ Structural inertia● Organization structure● Reward systems● Information systems■ Threats to expertise, power relationships & resources■ Little slack or funding■ Poor leadership● Traditional Change ○ Management initiated and controlled○ Problem focused○ Experts analyze and design solutions○ Doers implement solutions○ Rolled out as packaged change program○ Employees treated as major source of resistance● Problems with Traditional Change Methods○ Conflict between experts & doers○ Lack of employee buy-in○ Too rigid, not adaptive to local conditions○ Limited implementation○ Cynicism● 4 Types of Organization Change○ 2 Key dimensions■ How radical the change is? - determined by how far organization is form a goal or ideal stateIncremental Revolutionary■ How constant/incessant change is? - determined by how rapidly the organization’s competitive environment is changingDiscrete ContinuousIncremental RevolutionaryDiscrete Adaptation (JetBlue & Mattel - makes smallchanges on their Barbie dolls based on the country they are sold in)Re-creation(Apple & Harley Davidson - both almost went out of business → restructure company strategy & change how they compete)Continuous Fine Tuning (Toyota & Honda - continuously make quality improvements)Transformation (IBM & GE)■ Build a dynamic capability (this is what gives companies the competitive advantage today) into the core of the company - able to change and continuously transform themselves■ We’re moving to the bottom right box (“Transformation”)● Goal 2: Learn 2 Effective Methods for Changing Organizations○ Kurt Lewin’s Organization Change Model - looks at changes as process■ Driving forces● Encourage change● Push people & organization in new direction■ Restraining forces● Resist change● Push people & organization not to change■ Steady State - when driving forces equal restraining forces, equilibrium (no change)■ How to change steady state ● Increase driving forces or decrease restraining forces ● Best strategy is to decrease restraining forces■ 3 Stage Process: (Unfreeze, change, refreeze)● Unfreezing steady state○ Understand organization’s current steady state○ Force Field Analysis - map the change situation to identify existing driving and restraining forces● Transition to new state○ Need compelling story & clear change vision → buy in ○ Powerful coalition of stakeholders on board○ Strong leadership and role modeling○ Implementation plan with objectives, roles, and responsibilities○ Mechanisms to communicate the change and gain wide commitment○ Building capability to perform new behaviors○ Facilitation and support● Refreezing new state○ Integrate changes into organization culture (values and norms)○ Reinforcing mechanisms (systems, processes, and incentives in line with the new behavior)○ Monitor the changes and make necessary adjustments○ Self-Design Organization Change Model■ When refreezing takes too long for a constantly changing environment → more continuous change model■ Involves multiple stakeholders■ Innovation on siteUnfreezing Steady StateTransition to New Steady StateRefreezing New Steady StateRestraining forces Restraining forcesDriving forcesDriving forces■ Learning by doing■ Continuous change, improvement, and learning■ Part of normal operations■ Never fully implementing your changes because you are continuously changing■ Laying the foundation● Acquring knowledge○ Conceptual learning■ Broad organizational concepts■ Specific knowledge of design elements (structure, information and control systems, work design, human resource systems)■ Self-design strategy○ Practical Learning■ Company visits■ Cases and articles■ Speakers and conferences● Valuing○ Valued performance outcomes■ Quantity, quality, time, innovation, efficiency○ Valued human outcomes■ Quality of work life, employment security○ Valued organizational conditions■ Empowerment, teamwork● Diagnosing○ Inputs■ Competitive environment, business strategy○ Design elements■ Task & human, formal & informal organization○ Outputs■ Performance and human outcomes■ Approaches to designing● Fine-tuning current design (limited change/incremental)→ Imitating others→ Zero-based designing (extensive