Chapter 15 Organization

Transformation and
Strategic Change

An Experiential Approach to Organization Development 7th edition

Chapter 15 Slide 1

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 15 Slide 2

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 15 Slide 3

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 Lowes 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 15 Slide 4

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 15 Slide 5

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 15 Slide 6

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 15 Slide 7

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 15 Slide 8

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 15 Slide 9

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 15 Slide 10

Large-Scale Change Model

Model based on 3 key dimensions:
1. 2. 3.

Time frame of changeshort or long. Level of support of organizational culture. Degree of discontinuity with environment.

An Experiential Approach to Organization Development 7 th edition

Chapter 15 Slide 11

Figure 15.1 Strategies for Planned Change

An Experiential Approach to Organization Development 7 th edition

Chapter 15 Slide 12

Four Change Strategies (part 1 of 2)

1.

Participative evolution - incremental;

anticipates change; support of culture through collaborative means. Charismatic transformation - radical change in short time with support of culture.

2.

An Experiential Approach to Organization Development 7 th edition

Chapter 15 Slide 13

Four Change Strategies (part 2 of 2)

3.

Forced evolution - incremental adjustments

over longer period without support of culture. Dictatorial transformation - used in times of crisis; major restructuring running counter to internal culture.

4.

An Experiential Approach to Organization Development 7 th edition

Chapter 15 Slide 14

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 15 Slide 15

OD in Practice (part 2 of 3)
Lombardi: Were not just going to start with a
clean slate, were 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 15 Slide 16

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 arent going to grow and prosper is false

kindness.

An Experiential Approach to Organization Development 7 th edition

Chapter 15 Slide 17

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 organizations major strength when

consistent with strategies.

An Experiential Approach to Organization Development 7 th edition Chapter 15 Slide 18

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 15 Slide 19

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 15 Slide 20

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 15 Slide 21

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 15 Slide 22

Figure 15.2 Sharing the Vision

An Experiential Approach to Organization Development 7 th edition

Chapter 15 Slide 23

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 15 Slide 24

Figure 15.3 Relative Strength of Cultures

An Experiential Approach to Organization Development 7 th edition

Chapter 15 Slide 25

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 15 Slide 26

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 15 Slide 27

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.
Chapter 15 Slide 28

An Experiential Approach to Organization Development 7 th edition

Figure 15.4 Strategy-Culture Matrix

An Experiential Approach to Organization Development 7 th edition

Chapter 15 Slide 29

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 15 Slide 30

Our Changing World (part 2 of 2)

The VP of engineering, Were encouraging
creativity and tolerating chaos. Googles strategic moves set them apart from competition. One goal is to put all of worlds information into

Google.
An Experiential Approach to Organization Development 7 th edition Chapter 15 Slide 31

Strategic Change Management

Seeks to align organizations 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 15 Slide 32

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 15 Slide 33

Figure 15.5 Environmental Forces and Organizational Systems

An Experiential Approach to Organization Development 7 th edition

Chapter 15 Slide 34

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 15 Slide 35

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 15 Slide 36

Key Words And Concepts

Culture - reflects organizations past and is

rooted in firms 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 15 Slide 37

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 15 Slide 38

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 15 Slide 39

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.

An Experiential Approach to Organization Development 7 th edition

Chapter 15 Slide 40