Transcript Chapter 3
Chapter 3 Why Organizations Change McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Why Change? Why Change? Images of Managing Change External Pressures -Fashion -Mandated -Geopolitical -Market decline -Hypercompetition -Reputation & credibility Role of the Environment Internal Pressures -Growth -Integration & collaboration -Identity -New broom -Power & political • Change is a risky activity – many organizational changes fail or do not realize their intended outcomes. This raises the question: why is change is so prevalent? • Pressure to change comes from: – External, environmental pressures – Internal, organizational pressures 3-2 Images of Managing Change Why Change? Images Pressures for Change Images of Managing Change Director Change is a result of strategic pressures and controllable by managers’ ability to direct the organization’s response External Pressures Navigator Strategic change is in response to internal and external pressures. Multiple pressures facing managers will need to be taken into account. Caretaker Managers have little control over the inevitable pressures on the organization. Managers have little choice in the organization’s actions. Coach Pressures for change are constant and result in the need to develop and shape the organization’s capabilities to better enhance organizational outcomes. Interpreter Pressures for change are internal and external and managers need to understand and give meaning to these. Nurturer Pressures for change are large and small and the manager’s role is to enhance the adaptive capacity of the organization. -Fashion -Mandated -Geopolitical -Market decline -Hypercompetition -Reputation & credibility Role of the Environment Internal Pressures -Growth -Integration & collaboration -Identity -New broom -Power & political 3-3 Environmental Pressures Why Change? Images of Managing Change Pressure Examples Description Boeing Co. Neo-institutionalism: mimetic isomorphism. Managers imitate practices associated with successful organizations Chevron Texaco Neo-institutionalism: coercive isomorphism. An organization changes through formally or informally mandated requirements. External Pressures -Fashion -Mandated -Geopolitical -Market decline -Hypercompetition -Reputation & credibility Role of the Environment Internal Pressures -Growth -Integration & collaboration -Identity -New broom -Power & political Fashion pressures Mandated pressures Geopolitica l pressures 3M Macroeconomic changes (or crises) place pressure on organizations to change the way they operate. 3-4 Environmental Pressures Why Change? Images of Managing Change External Pressures -Fashion -Mandated -Geopolitical -Market decline -Hypercompetition -Reputation & credibility Pressure Examples Description Market decline pressures AOL Time Warner When current markets begin to decline there is pressure to find newer, more viable markets. Gateway The highly intensified rate of business – including shortened product life cycles and rapid responses by competitors – produces pressure for change at the organizational level. Walt Disney Company In light of recent corporate governance scandals, the pressure to maintain a good reputation and high level of credibility has increased. Hypercompetition pressures Role of the Environment Internal Pressures -Growth -Integration & collaboration -Identity -New broom -Power & political Reputation and credibility pressures 3-5 Debate: Role of the Environment Why Change? Images of Managing Change External Pressures -Fashion -Mandated -Geopolitical -Market decline -Hypercompetition -Reputation & credibility Role of the Environment Internal Pressures -Growth -Integration & collaboration -Identity -New broom -Power & political • Organizational learning vs. threat-rigidity – whether external pressures facilitate or inhibit the process of change. • Environment as an objective entity vs. environment as a cognitive construction – The former treats the environment as an objective entity to which managers must respond. The latter emphasizes the centrality of managers’ interpretations of environmental conditions as the key determinant of behavior. • Forces for change vs. forces for stability: – External forces can vary; they either promote change or promote stability. • Bridging (adapting) vs buffering (shielding): – These represent either strategies that can maintain effectiveness by adapting parts of the organization to changes happening in the outside environment (bridging) or focusing on efficiency by avoiding change through shielding parts of it from the effects of the environment (buffering). 3-6 Internal Pressures Why Change? Images of Managing Change External Pressures -Fashion -Mandated -Geopolitical -Market decline -Hypercompetition -Reputation & credibility Pressure Growth pressures Integration and collaboration pressures Examples Description Microsoft Existing systems and processes in an organization may no longer be applicable when the size of the organization increases. EDS Integration and creating economies of scale can lead to pressure for change in organizations. Forte Hotel A common organizational identity and the unified commitment of staff in different areas/departments of an organization can be difficult to manage and may encourage change. Role of the Environment Internal Pressures -Growth -Integration & collaboration -Identity -New broom -Power & political Identity pressures 3-7 Internal Pressures Why Change? Images of Managing Change Pressure Examples Description New broom pressures Bank of America Change at the senior management level – particularly of CEO - can often be a catalyst for significant changes in an organization. Power and political pressures Morgan Stanley Power relationships and politicking can change internal processes and decision making. External Pressures -Fashion -Mandated -Geopolitical -Market decline -Hypercompetition -Reputation & credibility Role of the Environment Internal Pressures -Growth -Integration & collaboration -Identity -New broom -Power & political 3-8