An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 1
Chapter 15Chapter 15
Organization
Transformation and
Strategic Change
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 2
Learning Objectives (part 1 of 2)
Identify and define organization
transformation in relation to change process.
Understand basic strategy-culture matrix and
other approaches to changing culture to fit
the strategy.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 3
Learning Objectives (part 2 of 2)
Recognize importance of corporate culture
and its relation to strategy.
Experience these concepts in management
simulation.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 4
The Revolution at Home Depot that Left Some Behind (part 1 of 2)
Home Depot is number-one home-improvement
retail chain in U.S.
It had unstructured and entrepreneurial culture.
Competitor Lowe’s began taking market share.
CEO Bob Nardelli was brought in to turn around
dysfunctional culture.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 5
The Revolution at Home Depot that Left Some Behind (part 2 of 2)
Lack of support for changes from lower levels.
Changes resulted in unintended consequences.
Nardelli brought in new top management team.
Innovation and sense of ownership declined.
HR manager said it was revolution, not
evolution.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 6
Strategy and Transformation
Success can work against a company when it
looses touch with customers.
Radical changes may be only choice for
organization in desperate need of change.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 7
Organizational Transformation (part 1 of 3)
Refers to drastic changes in how organization
functions and relates to its environment.
OD strategies represent more gradual
approaches to strategic change.
OT approaches are drastic and abrupt change.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 8
Organizational Transformation (part 2 of 3)
OT may or may not be developmental.
OT tends to use directive, not participative,
approaches to change.
Usually top-down, top-management driven.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 9
Organizational Transformation (part 3 of 3)
Requires shared vision, willingness to clean
house, restructure, tackle many problems.
OT tends to be shaped by use of power rather
than collaborative approaches.
Due to immediate threat, this may be only way
for organization to survive.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 10
Possible Large-Scale Change Strategies
Large-scale change approaches are:
Incremental - long-term planned change.
Transformative - immediate, drastic change.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 11
Large-Scale Change Model
Model based on 3 key dimensions:
1. Time frame of change—short or long.
2. Level of support of organizational culture.
3. Degree of discontinuity with environment.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 12
Figure 15.1Strategies for Planned Change
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 13
Four Change Strategies (part 1 of
2)
1. Participative evolution - incremental;
anticipates change; support of culture
through collaborative means.
2. Charismatic transformation - radical change
in short time with support of culture.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 14
Four Change Strategies (part 2 of 2)
3. Forced evolution - incremental adjustments
over longer period without support of culture.
4. Dictatorial transformation - used in times of
crisis; major restructuring running counter to
internal culture.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 15
OD in Practice: Masters of Transformation (part 1 of 3)
Vince Lombardi, coach of Green Bay Packers,
and Jack Welch, CEO of GE, provide insight
into 2 successful change agents.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 16
OD in Practice (part 2 of 3)
Lombardi: “We’re not just going to start with a
clean slate, we’re going to throw the old slate
away.”
Welch: “I tell people, if this place is stifling you
shake it, shake it, break it. Check the system,
because it wants to be a bureaucracy.”
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 17
OD in Practice (part 3 of 3)
Lombardi: Got rid of players, even those he
liked, when they did not perform.
Welch: “No leader enjoys making the tough
decisions. … Keeping people around who
aren’t going to grow and prosper is ‘false
kindness.’ ”
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 18
The Corporate Culture
Culture includes shared values and behaviors
formed by members of organization.
CEO and managers’ actions, not words,
produce culture.
A culture is organization’s major strength when
consistent with strategies.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 19
Strategy-Culture Fit
Strategy:
• Course of action used to achieve objectives.
• Relates resources of organization to opportunities
in environment.
Culture:
• Set of values for setting priorities.
• Critical factor in implementation of strategy.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 20
Definition of Culture
System of shared values held by members that
distinguishes one organization from another.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 21
Core Characteristics of Culture
Individual autonomy.
Sensitivity to customers and employees’ needs.
Support and assistance provided by managers.
Interest in having employees initiate new ideas.
Openness of communication channels.
Risk-seeking encouraged.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 22
Sharing the Vision
Many management theorists feel vision is
essence of leadership.
Vision involves several stages:
• Share the vision.
• Empower the individual.
• Acknowledge performance.
• Reward performance.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 23
Figure 15.2Sharing the Vision
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 24
Strong Versus Weak Cultures
Strong culture characterized by basic values
intensely held and widely shared.
Weak culture may be seen in young company
or one with high turnover.
Culture product of key components: structure,
systems, people, and style.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 25
Figure 15.3Relative Strength of Cultures
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 26
Strategy-Culture Matrix (part 1 of 3)
Four basic alternatives in determining strategy
changes:
1. Manage change (manageable risk)Change important and compatible with culture.
Use cultural reinforcement as strategies.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 27
Strategy-Culture Matrix (part 2 of 3)
2. Reinforce culture (negligible risk)Forge vision that emphasizes shared values.
Reinforce existing culture.
3. Manage around culture (manageable risk)Change important and incompatible with present
culture.
Reinforce value system, reshuffle power, use leverage in the organization.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 28
Strategy-Culture Matrix (part 3 of 3)
4. Change strategy to fit culture (unacceptable
risk)Change important but incompatible with culture.
Changing culture is explosive, long-term process that may be impossible.
Determine if strategic change is viable alternative or if strategy should be modified to fit more closely with existing culture.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 29
Figure 15.4Strategy-Culture Matrix
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 30
Our Changing World: All the Information at Google (part 1 of 2)
Google managed by CEO Schmidt and the two
founders, Page and Brin.
Decisions made by 3-way discussions.
Engineers migrate to projects that interest them.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 31
Our Changing World (part 2 of 2)
The VP of engineering, “We’re encouraging
creativity and tolerating chaos.”
Googles’ strategic moves set them apart from
competition.
One goal is to put all of world’s information into
Google.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 32
Strategic Change Management
Seeks to align organization’s strategy, structure,
and human resources to fit with environment.
Organizations composed of 3 systems:
Technical Political Cultural
These systems in perpetual interaction with
environmental change and uncertainty.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 33
Three Steps to Strategic Change
Step 1: Develop image of desired organization.
Step 2: Separate systems and intervene
separately in each one.
Step 3: Plan for reconnecting three systems.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 34
Figure 15.5Environmental Forces and Organizational
Systems
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 35
Reasons for Large-Scale Cultural Changes
Company has strong values that do not fit
changing environment.
Industry very competitive and changes quickly.
Company mediocre or worse.
Firm about to join ranks of very largest.
Firm small but growing rapidly.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 36
Cautions in Cultural Change
Cultural change can be difficult and time
consuming.
Culture change should be attempted only after
less-difficult solutions have been ruled out.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 37
Key Words And Concepts
Culture - reflects organization’s past and is
rooted in firm’s history.
Incremental approach - long-term planned
change that relies on collaboration.
Organization transformation (OT) - drastic,
abrupt change to structure, management, and
culture.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 38
Strategic change management - focuses on
alignment with strategy, structure and human
resources systems and a fit with environment.
Strategy - course of action used to achieve
major objectives.
Strategy-culture matrix - assess readiness of
culture for strategic changes.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 39
Technical, political, and cultural systems -
Organizational systems of strategic change
management model.
Transformational change - immediate drastic
change accomplished by directive methods.
Vision - a mental image of a possible and
desirable future state of organization.
An Experiential Approach to Organization Development 7 th edition Chapter 15Slide 40
Preparations for Next Chapter
Read Chapter 16.
Complete Profile Survey and Profile Form in
Simulation 16.1, Part A, Step 1.
Complete Step 1 of OD Skills Simulation
16.2.