Food for thought

Corporate revitalization often includes shifts in strategy or process or structure, but revitalization means a good deal moreit means a permanent rekindling of individual creativity and responsibility, a lasting transformation of the companys internal and external relationships, an honest-to-God change in human behavior on the job

Where We Are
Introduction & overview Strategies of change & conclusion EIS Simulation: The change process

Leadership & Initiation of change

Individual level: Change agent

Organization level: Culture & structure

Interpersonal level: Social capital

Session 5

Managing Change at the Organizational Level

Topics for Today

Theme 1: Organizational change through empowerment
Strategic consideration: top-down vs. bottom-up Empowerment as a strategy

Theme 2: Organizational change through structural design

The role of structural designs in organizational change Case study: Appex Corporation Debate: structural change vs. cultural change Summary and takeaways

Theme 1: Organizational change through the management of culture

The need to get people involved
The key is to change the mental model

Organizational culture
values and norms that are shared by people/groups that control the way they act internally and externally. Values = beliefs about goals and appropriate standards for achievement (behaviors) Norms = expectations about behavior in specific situations and toward one another.

Organizational Culture
Espoused Values
individual values (CEO, managers) that the group adopts through validation (cognitive transformation to shared value) conscious and explicit - serve a normative or moral function to guide members in certain situations and in socializing members. Strategies - goals - philosophies

Organizational Culture
Basic underlying assumptions:
a solution to a problem that works repeatedly & becomes taken for granted cannot be confronted or debated and are difficult (if not impossible) to change. can only be changed through re-examination and re-evaluation of the cognitive structure. individuals will distort or deny rather than adopt thus culture at this level is a defense mechanism somajor change means managing at this level.

Organizational Culture
Socialization - how people learn the culture Consists of stories, myths, legends, etc.
influence of the founder organizational structure composition of TMT

Adaptive cultures - encourage and reward initiative/innovativeness - easiest to change Inert cultures - cautious and conservative, does not value initiative & may discourage

Organizational Culture
Strong Adaptive Cultures characterized by:
Bias for action - autonomy, risk-taking, entrepreneurship Coherent mission - sticks to knitting, close to customers Structured for flexibility

Changing organizational culture

(Pascale et al. 2000) Incorporating employees in the process
Not communicating, motivating It is resocializationchanges the way people think

Leading from a different place

Out of the comfort zone Generate a sense of urgency, maintain healthy levels of stress, resist coming to the rescue with ready answers.

Instilling mental disciplines

Let employees see the larger picture Manage from the future Cerate relentless discomfort with the status quo.

Empowerment
(Quinn and Spreitzer 1997)

Empowered people have a sense of

Self-determination Meaning Competence Impact Because empowerment includes risk-taking, it opens the possibility of making mistakes. If those mistakes were punished, then individuals became disenchanted with their new ways of thinking, and regressed to past behaviors. If they received no support or reinforcement, then the cycle of empowerment was halted and individuals actually felt more disempowered than before. Quinn and Spreitzer (1997, p. 45)

Are you empowered? (Quinn and Spreitzer 1997)

To what extent do I have a sense of meaning and task alignment, and what can I do to increase it? To what extent do I have a sense of impact, influence, and power, and what can I do to increase it? To what extent do I have a sense of competence and confidence to execute my work, and what can I do to increase it? To what extent do I have a sense of self-determination and choice, and what can I do to increase it?

Debate: Change from top-down or bottom-up?

Theme 2: Organizational change through structural design

Strategic design and organizational control
The role of structure in organizational change
Structure Structure Structure Structure and organizational alignment power, resources vested interests generates stability, predictability

Types of organizational structures

Organizational Structure
Functional structure - groups people on the basis of common expertise & resources
Pro:
learning (transfer of knowledge within function) monitoring is easier processes become more efficient greater managerial control control becomes a problem as company grows communication and coordination (between functions) measurement (contribution of function) loss of strategic focus by TMT

Con:

Multi-Divisional Structure
Product lines or business unit is self-contained corporate HQ established for support & control
Divisional unit = operating authority HQ = strategic authority

Adv:

Financial control - easier to monitor Strategic control - time for TMT to focus on strategy Growth - add businesses or products Internal efficiency - allows clearer variance identification
Division/Corporate relationship Interdivisional competition - resources, parent attention Short-term focus Bureaucratic costs

Disadvantages:

Multi-Divisional Structures

Matrix Organization
Based on two forms of horizontal differentiation: functional and project/product Advantages:
Employees tend to be highly qualified, professional, & perform best in autonomous, flexible working conditions Employees can be moved from project to project leaves TMT to focus on strategy high bureaucratic costs constant movement of employees means $ two boss role can create conflict

Disadvantages:

Matrix Structure

Team Structure
Many companies use permanent crossfunctional teams
formed at the beginning of product development process and continued throughout implementation speeds innovation and customer responsiveness stronger in highly dynamic industries

Team Structure

Network Organizations
Core group of experts manages the outsourcing process closely This forms a hub & spoke type of organization consisting of many contracts Could create a control problem with contract organizations Example: Nike

Network Structure
.

Case study: Appex Corporation

Background
Shikhar Ghosh expertise in structural design Appex before Shikhar:
Small size: 20 employees, $2mil. Entrepreneurial Technology-driven, project-based Loosely structured Organizational culture: informal

Challenges:
Growing pains: consider Greiners 5 stages of growth From innovation to sustainable growth

The Five Phases of Growth

Larry Greiner

The search for structural fit

Circular structure
What kinds of problems does it run into?

Horizontal structure
Why does it not work for Appex at this stage?

Hierarchical, functional structure

Does it address the challenges? Why?

Divisional structure
What is the rationale? Does it work?

Questions for discussion

Is structure and control the most important aspect for organizational change at this stage of Appexs development? How do you evaluate the effectiveness of the different structures adopted at Appex over time? Would you do anything differently? What is the relationship between organizational structure and culture? The lessons from Citibank practice in Taiwan

Strategic choice in knowledge management

(Hansen, Nohria, and Tierney 1999)

Two strategies: codification vs. personalization

Examples: IBM versus 3M Codification: Provide high-quality, reliable and fast information implementation. Personalization: Provide creative, analytically rigorous advice on high-level strategic problems.

The trade-off between professionalization and bureaucratization

Implications:
structure vs. culture as control device Strategic design in culture, strategy, HRM

Summary and takeaways

Strategic choices for change: Top-down versus bottomup
Leadership and the initiation of change Empowerment: Organizational changes need bottom-up processes that involve employees and change their mindsets.

Strategic choices for change: Cultural vs. structural changes

Complementality between the two The need for a systematic change program What is your priority?