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Chapter 4 What Changes in Organizations

Scale of Change
Scale of Change: -1st order -2nd order
Between 1st & 2nd Order Change

First-order change:
Incremental Maintains and develops the organization adjusting systems, processes, structures, but not strategies and values E.g. continuous and smaller changes to the structure of an organisation Transformational Fundamentally changes the way an organization functions E.g. downsizing

Types of Change: -Downsizing -Technological -Mergers -Key Change Challenges

Second-order change:

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Scale of Change
Scale of Change: -1st order -2nd order
Between 1st & 2nd Order Change Types of Change: -Downsizing -Technological -Mergers -Key Change Challenges

First-order change:
Taking of individual initiatives Development of local routines

Second-order change:
Move from entrepreneurial to professional management structure Revitalization of already-established company Visionary change in the business

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Beyond 1st & 2nd Order Change


Scale of Change: -1st order -2nd order
Between 1st & 2nd Order Change

Mid-range changes

Types of Change: -Downsizing -Technological -Mergers -Key Change Challenges

Punctuated equilibrium Robust transformation

Overcomes inertia but is not revolutionary Avoids the alarming implications of large scale change
Long periods of stability followed by short bursts of change and instability Considers environmental conditions as being temporary and requiring robust responses including the enactment of new capabilities.
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Types of Change
Scale of Change: -1st order -2nd order
Between 1st & 2nd Order Change

DOWNSIZING Approaches to downsizing:


Retrenchment Downscaling Downscoping

Types of Change: -Downsizing -Technological -Mergers -Key Change Challenges

Does not necessarily lead to increased productivity Can be an excessively costly exercise

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Types of Change
Scale of Change: -1st order -2nd order
Between 1st & 2nd Order Change

TECHNOLOGICAL CHANGE There are a variety of new technologies being used, for example:

Types of Change: -Downsizing -Technological -Mergers -Key Change Challenges

Customer relationship management (CRM) systems Enterprise resource planning (ERP) Wireless technology Business process reengineering (BPR) Six Sigma

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Types of Change
Scale of Change: -1st order -2nd order
Between 1st & 2nd Order Change

MERGERS AND ACQUISITIONS Enable organizational growth at an accelerated rate Types of mergers and acquisitions:
Excessive capacity Neighbouring market expansion New product or market investment Research and development Leveraging to create industries

Types of Change: -Downsizing -Technological -Mergers -Key Change Challenges

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Key Change Challenges


Scale of Change: -1st order -2nd order
Between 1st & 2nd Order Change

This table outlines the key change challenges for the three types of change. These issues need to be addressed when managing change:
Downsizing
Employee retention. Avoiding hard landings. Minimizing political behavior and loss of teamwork. Survivor syndrome Communication Due diligence

New Technologies
Goal synthesis. Choice of technology Identifying political barriers. The IT team. Communication Time frame.

Mergers & Acquisitions


Cost savings. Cultural adjustment. Balancing change and continuity. Due diligence. Employee retention Contingency planning.

Types of Change: -Downsizing -Technological -Mergers -Key Change Challenges

Cultural adjustment.
Choice of restructuring technique

Contingency planning

Power structure.
Communication

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Chapter 5 Diagnosis for Change

Advantages of Diagnostic Tools


Advantages of diagnostic tools Diagnostic Models: -Organization -Components Readiness for Change

Help understand what to change, how and why. Simplify a complex situation. Identify priorities for attention. Highlight various organizational properties (e.g. strategy and structure) and their interconnectedness. Provide a common language with which to discuss organizational characteristics. Provide a guide to the sequence of actions to take in a change situation. Help us be more efficient and rational as we attempt to understand and change an organization.
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Diagnostic Models: Organization


Advantages of diagnostic tools Diagnostic Models: -Organization -Components Readiness for Change

Six-box organizational model:


The key focus here is on six variables purpose, structure, rewards, helpful mechanisms, relationship and leadership. This model is useful to maintain awareness of all areas for consideration even though one variable may be identified as the main area for attention.

7-S framework:
The 7-S framework: this focuses on seven key components that affect organizational effectiveness structure, systems, style, staff, skills, strategy and superordinate goals. The interconnectedness of these variables is vital to the success of change.

Star model:
An organization is effective when the five components of organizational design strategy, structure, processes and later capability, reward systems and people practices are in alignment.
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Diagnostic Models: Organization


Advantages of diagnostic tools Diagnostic Models: -Organization -Components Readiness for Change

Six-box organizational model

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Diagnostic Models: Organization


Advantages of diagnostic tools Diagnostic Models: -Organization -Components Readiness for Change

7-S framework

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Diagnostic Models: Organization


Advantages of diagnostic tools Diagnostic Models: -Organization -Components Readiness for Change

Star model

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Diagnostic Models: Organization


Advantages of diagnostic tools Diagnostic Models: -Organization -Components Readiness for Change

Congruence model:

Burke-Litwin model:

The organization is broken down into four components task, individuals, formal organizational arrangements and informal organisation. This is influenced by the context where the strategy is formulated and the output is then the performance of the organization. This model identifies the transformational external environment, mission and strategy, leadership and organizational culture - and transactional sources of change. This offers four frames for the managers to conceptualize how the organization operates. These frames are structural, human resource, political and symbolic frames. This technique allows organizational members to use images to describe the organizations and this can be used as a basis for discussion.
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Four frame model:

Diagnosis by image:

Diagnostic Models: Organization


Advantages of diagnostic tools Diagnostic Models: -Organization -Components Readiness for Change

Congruence model

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Diagnostic Models: Organization


Advantages of diagnostic tools Diagnostic Models: -Organization -Components Readiness for Change

Burke-Litwin model

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Diagnostic Models: Components


Advantages of diagnostic tools Diagnostic Models: -Organization -Components Readiness for Change

PESTEL Framework

Scenario analysis Gap analysis

This analyses the external environment in terms of six factors political, economic, social, technological, environmental and legal. Creates stories of possible future scenarios that are considered to be vital to the future of the organization. This is a tool used for reviewing the organizations position based on where they are and where they want to get to. These are five elements of strategy that are considered mutually reinforcing arenas, vehicles, differentiators, staging and lowest costs through scale advantage. Any misalignment of these signifies the need for change. This aims to identify the strategic assumptions of managers and determine their consistency with the business environment. This determines whether the strategy should be a focal point for change.

Elements of strategy

Strategic inventory

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Diagnostic Models: Components


Advantages of diagnostic tools Diagnostic Models: -Organization -Components Readiness for Change

Newsflash exercise:

Cultural web:

This is an exercise that encourages managers to be very specific and succinct about change and clearer about the intended outcomes. This provides a way of mapping the organizational culture through seven elements paradigm, rituals and routines, stories, symbols, control systems, power structures and organizational structure. Six possible structural dilemmas that can be encountered during change are diagnosed so areas that have been traded-off during the change process can be identified Success is arguably achieved only if four types of organizational boundaries are diagnosed and reduced. These are vertical, horizontal, external and geographical boundaries.
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Structural dilemmas:

The Boundaryless Organization:

Readiness for Change


Advantages of diagnostic tools Diagnostic Models: -Organization -Components Readiness for Change

Assessing the organization's readiness to change can be a mediating variable between change management strategies and the outcomes of desired strategies. A perchance audit of the readiness of an organization for change can provide an indication of the likely outcome of a change initiative at a particular point in time. Some ways of doing this include:

Questionnaires Stakeholder analysis: This focuses on the position of stakeholders in the change process and allows the manager to be better informed of how to confront potential issues. Force-field analysis: This identifies factors that are driving forces for change as well as restraining forces.

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