CH-1-2 Organization Development and Reinventing the Organization – An Experiential Approach to Organization Development : Chapter Notes

This Document Contains Chapters 1 to 2 Chapter 1 Organization Development and Reinventing the Organization Learning Objectives 1. Define the concept of organization development and recognize the need for change and renewal. 2. Describe organization culture and understand its impact on the behavior of individuals in an organization. 3. Understand the expectations of the psychological contract formed on joining an organization. 4. Describe the five stages of organization development. Student Premeeting Preparation 1. Read Chapter 1. 2. Read and prepare analysis for Case: TGIF. Instructor Preparation and Materials 1. Simulations: no special materials are required. 2. In general, this class begins in a unique way. Students are not usually asked about their expectations upon beginning a class, and they generally respond positively to this approach. Here you are beginning the practitioner-client relationship, sensing the need for change, and providing the framework for experiential learning. Open communication, high participation, an active role, and shared responsibility are course objectives. LECTURE OUTLINE 1) Learning objectives. (pg. 3) a) Define the concept of organization development and recognize the need for change and renewal. b) Describe organization culture and understand its impact on the behavior of individuals in an organization. c) Understand the expectations of the psychological contract formed on joining an organization. d) Describe the five stages of organization development. 2) The challenges for organizations. (pg. 3) a) Change is avalanching down on our heads. b) Tomorrow’s world will be different from today’s world. c) Organizations will need to adapt to changing market conditions and at the same time cope with the need for a renewing rather than a reactive workforce. d) Organizations are never completely static and they are in continuous interaction with external forces. (See Figure 1.1, The Organization Environment) 3) What is organization development? (pg. 4) a) Definition of OD. i) OD is long-range efforts and programs aimed at improving an organization’s ability to survive by changing its problem-solving and renewal processes. ii) OD is: (1) Planned. (2) Organization wide. (3) Managed from the top. (4) Designed to increase organization effectiveness and health. (5) Planned interventions that use behavioral science knowledge. b) The characteristics of O D. (See Table 1.1, Major Characteristics of the Field of OD) i) Change is planned. ii) Collaborative approach. iii) Performance orientation. iv) Humanistic orientation. v) Systems approach. vi) Scientific method. c) Why OD? i) Most cited reasons for beginning a change program: (1) The level of competition. (2) Survival. (3) Improved performance. ii) Primary goals of change programs: (1) Change the corporate culture. (2) Become more adaptive. (3) Increase competitiveness. d) Factors leading to the emergence of OD. i) The need for new organizational forms. ii) The focus on cultural change. iii) The increase in social awareness. 4) The only constant is change. (pg. 6) a) Change occurs so fast that it is a moving target. b) Organizations must anticipate change and respond to changing demands. c) Today’s managers need a new mind-set. i) Flexibility. ii) Speed. iii) Innovation. iv) Constantly changing conditions. d) Successful firms will share these traits: (See Figure 1.2, The Changing Organization of the Twenty-First Century.) i) Faster. ii) Quality conscious. iii) Employee involvement. iv) Customer oriented. v) Smaller. 5) The evolution of organization development. (pg. 8) a) OD has evolved since the late 1940s. b) NTL Laboratory-Training methods. c) Survey research and feedback. d) The extent of OD applications. 6) Who does OD? (pg. 9) a) OD practitioners consist of specialists and those applying OD in their daily work. b) OD specialists. i) Professionals trained in OD. ii) Sometimes called OD consultants. iii) Specialists are: (1) Internal practitioners – from within the organization. (2) External practitioners – from outside the organization. c) Managers and leaders applying OD principles and concepts. i) May not call what they do OD. ii) The activities include: (1) Team leaders developing and coaching teams. (2) Building learning organizations. (3) Implementing total quality management. (4) Creating boundaryless organizations. 7) The organization culture. (pg. 10) a) A system of shared meanings including: i) Language. ii) Dress. iii) Patterns of behavior. iv) Value system. v) Feelings. vi) Attitudes. vii) Interactions. viii) Group norms. b) Norms. i) Organized and shared ideas regarding what members should do and feel, how behavior is regulated, and what sanctions should be applied. ii) Pivotal norms - essential to accomplishing organization’s objectives. iii) Peripheral norms - support and contribute to the pivotal norms but are not essential to the organization’s objectives. 8) The socialization process. (pg. 11) a) The process that adapts employees to the organization’s culture. (See Figure 1.4, The Socialization Process) b) New employees become aware of the norms. c) Employees encounter the organization culture. i) Individuals need to understand things like power, status, rewards, and sanctions for specific types of behaviors. ii) The organization may be attempting to influence them. d) Adjustment to cultural norms and socialization occurs in 3 ways: (See Figure 1.5, Basic Responses to Socialization) i) Rebellion - rejection of all values and norms. ii) Conformity - acceptance of all values and norms. iii) Creative individualism - acceptance only of pivotal values; rejection of others. e) Creative organizations encourage feedback and allow employees to examine openly the pivotal and peripheral norms. 9) Psychological contract. (pg. 14) a) An unwritten agreement between individuals and the organization of which they are members. b) Open-ended so that issues may be renegotiated. 10) A model for organizational change. (pg. 14) a) OD is a continuing process with emphasis on viewing the organization as a total system of interacting and interrelated elements. b) Five-stage model for OD process. (See Figure 1.6, Organization Development’s Five Stages) i) Stage one: Anticipating need for change. (1) Someone, usually a key manager, recognizes the need for change. (2) There must be a felt need for change. ii) Stage two: Developing the practitioner-client relationship. (1) The OD practitioner enters the system. (2) Good first impressions and a match between the practitioner and client system are important. (3) The practitioner attempts to establish a pattern of open communication, a relationship of trust, and an atmosphere of shared responsibility. iii) Stage three: The diagnostic phase. (1) The practitioner and the client begin to gather data about the system. (2) The objective is to better understand the client system’s problems, identify forces causing the situation, and to provide a basis for selecting change strategies. iv) Stage four: Action plans, strategies, and techniques. (1) A series of interventions, activities, or programs aimed at resolving problems and increasing organization effectiveness. (2) These programs apply such OD techniques as team building, intergroup development, goal setting, and job design. v) Stage five: Self-renewal, monitor, and stabilize. (1) As the OD program stabilizes, the need for the practitioner should decrease. (2) Monitor the results. (3) Stabilize the change. (4) Gradual disengagement of OD practitioner. OD Applications GE’s Epicenter of Change (p. 7) SUMMARY GE’s Leadership Center is the tool that the company uses to spread change throughout the organization. The Center is at the forefront of real-world application for organizational development, leadership, innovation and change. MAJOR POINTS • The participants (around 10,000 annually) at the center include entry-level to the highest-performing executives. • GE also invites customers to the center to help solve mutual problems. • Courses typically run one to three weeks. • Subjects include leadership and essential basic management skills such as team building and giving presentations. • Executive courses incorporate subjects in leadership, innovation, and strategy. • Participants typically are 50% non-U.S. and new centers have opened outside of the U.S. • GE believes that building strong leaders is strategically imperative. • GE’s current challenges and future success depends in part upon how well their employees learned their lessons at the Leadership Center. QUESTIONS 1. How does the Leadership Center serve as a center for change at GE? Answer: By bringing employees ranging from entry-level to top level executives and from GE operations world-wide, GE trains leaders for the future. Though initially the center concentrated upon leadership training, the center now uses the center as a tool to spread change throughout the company. The center is at the vanguard of cutting-edge thinking in organizational development, leadership, innovation, and change. Customers of GE are also invited to the center so that they and GE employees can jointly discuss and solve major issues. By building strong leaders, GE is strategically preparing for a turbulent and challenging future. 2. Visit GE’s Web site to learn about the Leadership Center’s current programs at www.ge.com/ and www.ge.com/company/culture/leadership_learning.html. Leave No One Behind At Starbucks (p. 13) SUMMARY Starbucks’ unique culture and philosophy has been instrumental in their success. With the rapid expansion of the company and now confronted with new competitive pressures, they face significant challenges of maintaining the “formula” that helped them become successful. MAJOR POINTS • One of Starbucks’ formula for success is a CEO who communicates a strong and clear vision to their employees. • The philosophy of “Leave no one behind” shows up in training, salaries, and benefit packages. • Employees consistently rate Starbucks as one of the best companies to work for. • Employee surveys found that the two principal reasons people work for Starbucks are opportunities to work with an enthusiastic team and to work in a place where they feel they have value. • Starbucks looks for people who are adaptable, self-motivated, passionate, and creative team players. • With a company of over 170,000 world-wide employees, maintaining an entrepreneurial spirit is a major objective. • With increasing competition and challenging economic conditions, Starbucks is striving to create both value and quality while maintaining the precepts that made it successful. QUESTIONS 1. What do you think Schultz meant when he said that Starbucks’ objective is “Getting big and staying small?” Answer: Schultz is likely trying to maintain the entrepreneurial spirit of Starbucks when they were a small and growing company. With a more mature company of around 170,000 employees, the challenge is not to allow the company to lose the culture that helped it become successful. 2. If possible, interview a present or former employee of Starbucks to get his or her impression of the company. Answer: Many former and current employees appreciate the company's commitment to diversity and inclusion, as well as its focus on employee benefits and career development. They often mention the supportive work environment and opportunities for advancement. However, some also note challenges such as high pressure during busy periods and the need for better work-life balance. 3. If you have visited a Starbucks, did you see any examples of teamwork among its employees? Answer: Yes, at Starbucks, teamwork is often evident. Employees typically collaborate seamlessly to handle customer orders, manage busy periods, and maintain store operations. For example, baristas and cashiers often work together to ensure orders are processed quickly and accurately, while also supporting each other during peak times. 4. Research the current lists of Fortune’s “100 Best Companies to Work For” and “America’s Most Admired Companies.” Information is available at www.money.cnn.com/magazines/fortune/fortune_archive/. Answer: However, you can find the latest lists of Fortune’s “100 Best Companies to Work For” and “America’s Most Admired Companies” on the Fortune website or via CNN Money. These lists typically feature companies known for their strong workplace culture, employee satisfaction, and overall reputation. For the most accurate and recent information, please visit the Fortune website or search for the latest articles related to these rankings. 5. Research current information about Starbucks’ sales and revenue. Information and their annual report can be found at www.starbucks.com/. Answer: As of their most recent annual report, Starbucks reported strong financial performance. For the fiscal year 2023, Starbucks generated approximately $36 billion in revenue, with a notable increase in both same-store sales and global market presence. For the most up-to-date figures and detailed financial information, you can visit Starbucks' official website or consult their latest annual report. Review Questions 1. How would you define “organization development”? Answer: Organization development is a series of planned behavioral science intervention activities with the purpose of increasing the effectiveness of the system and developing the potential of all individual members. OD efforts are planned, systematic approaches to change that are carried out in collaboration with organization members to help find improved ways of working together toward individual and organizational goals. 2. How does OD differ from a single-change technique such as management training? Answer: OD represents a systems approach that is concerned with the interrelationship of various divisions, departments, groups, and individuals as inter¬dependent subsystems of the total organization. A single technique such as management training is aimed at changing individual behavior, whereas OD is focused on the larger goal of developing an organization-wide improvement in managerial style. OD uses many different techniques and no single technique represents the OD discipline. 3. Identify and demonstrate the uses of the psychological contract. Answer: Psychological contract involves the expectations on the part of individuals and organizations to which they belong or in which they take part (i.e., work). Each side must understand that such a “contract” exists and that unless these expectations are met, there will be conflict. 4. Explain the difference between pivotal and peripheral norms. Answer: Pivotal norms are essential to accomplishing the organization’s objectives. Peripheral norms support and contribute to the pivotal norms but are not essential to the organization’s objectives. 5. Explain three basic responses an individual may have to socialization. Answer: Socialization is the process that adapts employees to the organization’s culture. An individual may respond to the socialization in three basic ways. At one extreme, an individual may conform to all the norms of the organization, resulting in uniformity of behavior and complete acceptance of organization values. At the other extreme, an individual may rebel, reject all values, or leave the organization altogether. Another alternative between the two previous extremes is for an individual to accept the pivotal norms and seriously question the peripheral norms, which is called creative individualism. 6. Read a book or an article and identify the organizational culture and norms it embodies. Answer: In "Delivering Happiness" by Tony Hsieh, which details the culture at Zappos, the organizational culture emphasizes a fun, customer-focused environment with a strong commitment to employee happiness and autonomy. The norms include a focus on providing exceptional customer service, fostering a supportive and collaborative work atmosphere, and encouraging personal and professional growth. 7. Identify and explain the five stages of organization development. Answer: Stage one is to anticipate a need for change. People in the organization perceive that the organization is in a state of disequilibrium or needs improvement. In stage two, relations between the practitioner and organization members (the client) develop. The practitioner attempts to establish a pattern of open communication, a rela¬tionship of trust, and an atmosphere of shared responsibility. Stage three is the diagnostic phase where the practitioner and client gather data and analyze the data to identify problem areas and causal relationships. In stage four action plans, strategies, and techniques are developed to resolve problems and increase organization effectiveness. The plans and techniques include total quality management (TQM), job design, role analysis, goal setting, team building, and intergroup development. Stage five, the last stage, is a period of self-renewal, monitoring, and stabilizing the OD program. In this stage the change program is monitored to make sure that the new behavior is stabilized and internalized. If this is not done, the tendency is for the system to regress to previous ineffective modes or states. The client system needs to develop the capability to maintain innovation without outside support. KEY WORDS AND CONCEPTS Define and be able to use the following words and concepts: Action research model - collecting information, feeding back information to the client system, developing and implementing action programs to improve system performance. (p. 15) Change Agent - a person attempting to bring about planned change in an organization. (p. 10) Client System- the person or organization that is the subject of the change. (p. 10) Creative individualism - questioning of peripheral norms, accepting of pivotal norms. (p. 13) External practitioner - a person from outside the organization who serves as a resource for change. (p. 9) Internal practitioner - an internal resource for change, such as a manager or other member of the organization. (p. 9) Norms - the organized and shared ideas regarding what members should do and feel, how this behavior should be regulated, and what sanctions should be applied. (p. 10) Organization culture - a system of shared meanings, including language, dress, values, norms, and attitudes of an organization. (p. 10) Organization development - planned strategy to bring about change. (p. 4) OD practitioner - the people using, advocating, and assisting others to implement OD. (p. 6) OD specialist - professionals that have specialized and trained in organization development and related areas such as organization behavior, applied social sciences, interpersonal communications, and decision making. (p. 9) Peripheral norms - norms that support and contribute to the pivotal norms but that are not essential to the organization’s objectives. (p. 11) Pivotal norms - norms essential to an organization’s objectives. (p. 11) Psychological contract - expectations between an individual and an organization. (p. 14) Socialization - process of an individual adjusting to an organization’s culture. (p. 11) ADDITIONAL RESOURCES Readings: Beckhard, Richard, Organizational Development: Strategies and Models (Reading, Mass.: Addison-Wesley Publishing Co., Inc., 1969.) If you have difficulty locating this classic OD book, you might try amazon.com and ebay.com. Beckhard, Richard, Agent of Change: My Life, My Practice (San Francisco: Jossey-Bass, 1997.) Bennis, Warren G., Organization Development: Its Nature, Origins, and Prospects (Reading, Mass.: Addison-Wesley Publishing Co., Inc., 1969.) This Bennis and the Beckhard book are part of an Addison-Wesley OD series published in the late 1960s. Bennis, Warren G., The Essential Bennis (San Francisco: Jossey-Bass, 2009.) Schein, Edgar, Organizational Culture and Leadership (San Francisco: Jossey-Bass, 2004.) Tichy, Noel. M. and S. Sherman, Control Your Destiny or Someone Else Will (New York: Harper Business, 2001.) Video: The Target Shoots First, 2000, 70 minutes, documentary. Directed, written, produced, and filmed by the lead character, Christopher Wilcha. A recent 22 year old college graduate goes to work at Columbia House and video tapes his work and experiences. He is a production manager for the mail order record business at Columbia. Subjects include learning the culture, norms, and psychological contracts. This film was shown on the Sundance TV channel. It may have become available. This is a good film to lead off the semester. Additional information is available at http://www.imdb.com. The film is also appropriate for Chapters 3 and 16. SIMULATION PROCEDURES Simulation 1.1 (p. 19) Auditioning For The Saturday Night Live Guest Host Spot 1. Student premeeting preparation: None. 2. Introduction: a. Here we want to set a norm of participation, fun, and positive feedback. 3. Suggestions: a. After a brief introduction, we begin sharing information about ourselves. b. A potential problem is one of class size, as it requires about five minutes per person for the introduction. 4. Discussion points: a. What norms have emerged? b. Did you learn more about the interviewer or the interviewee? c. Do you feel more comfortable with the class? 5. Total time suggested: 60 minutes You will need to adjust these times to fit your specific schedule and class plans. Minutes Steps 1 and 2 20 Steps 3 and 4 40 Total 60 Notes Simulation 1.2 (p. 21) The Psychological Contract 1. Student premeeting preparation: None 2. Suggestions: a. If possible, the class should be seated in a circle. How you handle the questions will help to determine the development of the course. Students are sometimes hesitant to ask meaningful questions and, at other times, to bring out serious issues as a test of how you will respond. Anything you can do to handle these issues openly will have a long-term payoff. b. The issues that are likely to emerge, or that you may want to present, are those of preclass preparation, exams, and grading. A critical problem for courses of this type is premeeting preparation. Sometimes students are under pressure in more structured courses and feel they can let this course-work slide. The timing of the simulations is such that when people fail to do the prework, it slows and delays the class and degrades the learning process. You very likely, on the other hand, will not feel comfortable in the role of police person (checking on homework), so this issue needs to be confronted. c. At this point, students are usually emphatic about two things: they don’t like exams and they don’t like to write papers. How you deal with these issues may well be a factor in your student / professor relationship. We leave the options open to the class, but explain the position of the previous class and that the simulations are important to learning. The prework is left up to the class, but it has never posed a serious problem. 3. Discussion points: a. Expectations. b. Roles. c. Goals and rewards. d. Grades. 4. Total time suggested: 15 to 115 minutes depending on parts used You will need to adjust these times to fit your specific schedule and class plans. Minutes Part A, Steps 1 to 3 15 Part A, Step 4 20 Part B, Steps 1 to 3 15 Part B, Step 4 20 Part C, Steps 1 and 2 15 Part D, Steps 1 and 2 15 Part D, Step 3 15 Total 115 Notes CASE TEACHING NOTES T.G.I.F. (p. 28) I. Problems A. Macro 1. Employees drinking alcohol while at work pose liability problems to Quantum, especially when the alcohol is furnished by the company. 2. As Quantum grows, the potentially out-of-control beer busts may be only a symptom of rapid growth. 3. How to deal with motivation and esprit de corps in the face of rapid growth and change. B. Micro 1. Stan shows indications of being unwilling to deal with potential problems and hear divergent points of view. II. Causes 1. Rapid growth. 2. A degree of immaturity from some employees. III. Alternatives 1. Maintain status quo. 2. Still have TGIF parties but don’t serve beer or other alcoholic beverages. a. Explain the legal problem very openly to employees. b. Introduce alternatives such as better food as a replacement for beer. c. Have team sports such as softball or volley ball. 3. Use no-host bar. a. This will likely not remove legal responsibility. b. Might be seen as being “cheap” by the employees. 4. Use designated driver or company bus. 5. Explain the problem to employees and ask for suggestions. IV. Recommendations Remove the alcohol from the parties. The legal responsibilities are too great a risk. A combination of alternatives 2 and 5. Ask for suggestions as to a replacement for the alcohol. STUDENT PREPARATIONS FOR THE NEXT CHAPTER 1. Read Chapter 2. 2. Read the instructions for OD Skills Simulation 2.1. Before coming to class, complete Part A, Steps 1 and 2, which includes completing the Profile Survey, Profile Form, Class Performance Form, and Objectives Form. Familiarize yourself with the “Instructions for Developing OD Practitioner Roles and Skills” at the end of the simulation. 3. Read and analyze Case: The NoGo Railroad. Chapter 2 Organization Renewal: The Challenge of Change Learning Objectives 1. Recognize the factors contributing to the accelerating rate of change. 2. Identify the ways an organization uses renewing processes to adapt to change. 3. Determine the individual and group methods of coping with change. 4. Understand and apply the sociotechnical-systems approach to OD. Student Premeeting Preparation 1. Read Chapter 2. 2. Read the instructions for OD Skills Simulation 2.1. Before coming to class, complete Part A, Steps 1 and 2, that includes completing the Profile Survey, Profile Form, Class Performance Form, and Objectives Form. Familiarize yourself with the “Instructions for Developing OD Practitioner Roles and Skills” at the end of the simulation. 3. Read and prepare analysis for Case: The NoGo Railroad. Instructor Preparation and Materials 1. Simulations: no special materials are required. 2. It is a good idea to review the Profile Survey and emphasize the need for candid, honest answers. To conserve class time, it is important that the students complete the Profile Survey before coming to class. LECTURE OUTLINE 1) Learning objectives. (pg. 32) a) Recognize the factors contributing to the accelerating rate of change. b) Identify the ways an organization uses renewing processes to adapt to change. c) Determine the individual and group methods of coping with change. d) Understand and apply the sociotechnical-systems approach to OD. 2) The challenges of change. (pg. 32) a) Pressure for change. i) Market, product, and competitive conditions. ii) Downsizing, reengineering, flattening structures, going global, and initiating more sophisticated technologies. b) Renewal. i) Managers must make adaptive changes to the environment. ii) The only constant is change. iii) The focus of OD is on changing organizational systems, stressing the situational nature of problems, and their system-wide impact. iv) The systems approach provides a way of observing, analyzing, and solving problems in organizations. c) Constant change. i) Increasing rate of change. ii) Impact of future shock. iii) Organizations need the capacity to adapt to a changing environment. d) This chapter discusses the first stage of an OD program: anticipate the need for change. (See Figure 2.1, Stage One of Organization Development’s Five Stages.) 3) Organization renewal—adapting to change. (pg. 34) a) Organizational renewal is important to an organization’s survival. b) Organization renewal is defined as an ongoing process of building innovation and adaptation into the organization. c) Approaches to change dictated by the type of environment. i) Stable environment- stable product, few competitors. ii) Hyper turbulent environment – rapidly changing products, new competitors, rapid innovation, fast market growth. d) Model of Adaptive Orientation. (See Figure 2.2, Model of Adaptive Orientation in Organizations.) i) Two dimensions. (1) Adaptive orientation. (2) Environmental stability. ii) Four types of orientation. (1) Sluggish-thermostat management (stable environment, low adaptation). (a) A managerial style based on low risk. (b) Organizations using this style typically have very stable goals and a highly centralized structure. (2) Satisficing management (stable environment, high adaptation). (a) A style that is adequate and average. (b) Planning and decision-making are usually concentrated at the top (3) Reactive management (hyper turbulent environment, low adaptation). (a) A style of reacting to a stimulus after conditions in the environment have changed. (b) It is a short-term, crisis type of adaptation. (c) It often involves replacement of key people, hasty reorganization, and drastic cutting of personnel and product lines. (4) Renewing/transformation management (hyper turbulent environment, high adaptation). (a) A style that introduces change to deal with future conditions before these conditions actually occur. (b) The organizations using this style are faster at developing new ideas, more responsive to competitive changes, and more participative in involving organization members in the renewal process. 4) The systems approach: finding new ways to work together. (pg. 38) a) The horizontal corporation breaks the company into its key processes and creates teams from different departments to run them. b) The organization as a system. i) A system is a set of interrelated parts unified by design to achieve some purpose or goal. ii) Systems have several basic qualities: (1) A system must be designed to accomplish an objective. (2) The elements of a system must have an established arrangement. (3) Interrelationships must exist among the individual elements of a system. (4) The basic ingredients of a process are more vital than the basic elements of a system. (5) An organization’s overall objectives are more important than the objectives of its elements. iii) A system consists of the flow of inputs, processes, and outputs. (See Figure 2.3, The Organization as an Open System) c) Open systems. i) An open system is in continual interaction with its environment. ii) It continually receives information termed feedback from its environment, which helps it adjust. 5) The sociotechnical system. (pg. 40) a) A system of coordinated human and technical activities. (See Figure 2.4, The Sociotechnical System) i) The goals and values subsystem - the basic mission and vision of the organization. ii) The technical subsystem - the primary activities, including the techniques and equipment, used to produce the output. iii) The structural subsystem - the formal design, policies, and procedures. iv) The psychosocial subsystem (culture) - the network of social relationships and behavioral patterns of members. v) The managerial subsystem - spans the entire organization by directing, organizing, and coordinating all activities toward the basic mission. b) High performance systems. i) These systems occur by design and not by chance. ii) Key variables are the business situation, strategy, design elements, culture, and results. c) The contingency approach. i) The contingency view suggests that one must consider the specific organization and its environmental conditions in formulating change programs. ii) This approach identifies “if-then” relationships and suggests general change directions. 6) Future shock and change. (pg. 42) a) Future shock is too much change in too short a time. b) Alvin Toffler, author of Future Shock, suggests that future shock arises from the inability to adapt to accelerating rates of change. c) The capacity of management to react is strained. d) Managers must be more adaptable and flexible than ever before. e) Constant and rapid changes occurring in finance and economics, technology, and social values. 7) Organization transformation (OT) and organization development. (pg. 43) a) OT is the action of changing an organization’s form, shape, or appearance or changing organization energy from one form to another. b) Organization transformation is like a revolution. i) OT transforms the very framework and assumptions of an organization. ii) It is unplanned changes in response to pressures. iii) The change occurs in a short time frame. c) Organization development is like an evolution. i) OD is planned changes on a large scale. ii) Longer time frame. iii) Gradual implementation. d) OD is planned organizational change. i) A deliberate attempt to modify the functioning of the total organization or one of its major parts in order to bring about improved effectiveness. ii) Persons attempting to bring about change are practitioners. iii) The organization being changed is the client system. e) Individual effectiveness. i) Change efforts that focus on individual effectiveness. ii) The methods range from empowerment training programs to high-powered executive development programs. iii) The goals are improved managerial, technical skills, or improved interpersonal competence. f) Team effectiveness. i) Change efforts that focus on the team or work group. ii) There is an emphasis on improving problem-solving, working through conflicts, and ways the group can improve its effectiveness and productivity. iii) Activities are designed to focus on task activities, and team process. (1) Task activities are what the team does and team process is how the team works and the relationships among team members. (2) One technique often used to help teams examine their operations is process observation. (3) Process observations examine: (a) Content - the task of the group. (b) Process - the way the group functions. g) Organization effectiveness. i) Change efforts that focus on the total organization system. ii) These activities aim at improving effectiveness by structural, technical, or managerial subsystem changes. OD Applications Google’s Culture (p. 35) SUMMARY In the face of rapid growth, Google still operates under the same freewheeling managerial style that it started with. A central challenge is to develop further their creative culture. MAJOR POINTS • Though Google has a CEO, Eric Schmidt, it is in practice co-managed by Schmidt and its two founders, Larry Page and Sergey Brin. • Challenge to maintain a creative culture with a worldwide workforce of over 20,000. • The company uses fluid working groups where engineers move to projects that interest them. • Engineers are encouraged to spend 20 percent of their time working on their own research projects. • Though Google has the outward impression of being disorganized, it maintains its focus and strategy. QUESTIONS 1. Do you think Google will be able to maintain its controlled-chaos type of culture? Support your position. Answer: Yes, Google is likely to maintain its controlled-chaos culture due to its strong emphasis on innovation, flexibility, and employee empowerment. The company’s organizational structure and policies are designed to support creative freedom and experimentation while maintaining strategic oversight. However, as Google grows and faces increasing regulatory and market pressures, it will need to balance this culture with more structured processes. 2. Research Google to determine if it has been able to maintain its culture-strategy mix and remain competitive. Google’s web site for corporate information is www.google.com/about.html. Answer: Yes, Google has largely maintained its culture-strategy mix while staying competitive. The company continues to foster innovation through a flexible work environment and emphasis on creativity, as reflected in its "20% time" for personal projects and open office spaces. Despite its growth and increasing regulatory scrutiny, Google remains competitive by consistently investing in new technologies and expanding its product offerings. For the most recent updates, visit Google’s corporate information page. Apple and Renewal (p. 43) SUMMARY Apple’s mission of giving customers more choices and better products has produced a highly innovative and profitable company. MAJOR POINTS • Apple consistently shows up on business magazine lists as one of the most innovative companies and at the top of Fortune 500 companies based on total return to shareholders. • A large part of the success can be attributed to the culture defined primarily by co-founder Steven Jobs. • Jobs’ perfectionist approach to product development has caused some internal problems. • His management style tends toward throwing tantrums and humiliating employees who disagree with his ideas. • In terms of strategy, execution, and day-to-day operations, Tim Cook is critical to Apple’s success. QUESTIONS 1. Research Apple’s product history to discover the progression of its major products. Answer: Apple's major product progression includes: 1. Apple I (1976): The first personal computer, built by Steve Wozniak and Steve Jobs. 2. Macintosh (1984): Introduced the first commercially successful personal computer with a graphical user interface. 3. iPod (2001): Revolutionized the music industry with its portable digital music player. 4. iPhone (2007): Transformed the smartphone market with its touch interface and App Store. 5. iPad (2010): Created a new category for tablet computing. 6. Apple Watch (2015): Entered the wearable tech market with smartwatches. 7. M1 Chip (2020): Marked a significant shift to Apple-designed processors in Macs, enhancing performance and efficiency. Apple has consistently innovated and expanded its product lines, shaping technology trends over the decades. 2. What are its newest product innovations? Apple’s Web site is www.apple.com/. Answer: As of 2024, Apple’s newest product innovations include: 1. iPhone 15 Series: Features advanced camera systems, USB-C connectivity, and improved performance with the A17 chip. 2. Apple Watch Ultra 2: Enhanced durability and advanced health monitoring features. 3. M3 Chips: Latest processors offering significant performance and efficiency improvements for Mac computers. 4. Vision Pro: A cutting-edge mixed reality headset with spatial computing capabilities. For the most current updates, check Apple’s official website. 3. To what do you attribute Apple’s ability for self-renewal? Answer: Apple's ability for self-renewal is attributed to its strong focus on innovation, a culture of design excellence, and strategic vision. The company invests heavily in research and development, continuously adapts to technological trends, and leverages a robust ecosystem of hardware, software, and services to stay ahead in the market. Review Questions 1. What is the implication of organization renewal for today’s organizations? Answer: Organization renewal is an ongoing process of being ready for change, preparing for change, expecting change, and learning to adapt to change. An organization must have planned change in order to survive. This process is called evolution. Organization transformation is defined as the action of changing the organization’s form, shape, or energy to cope with unplanned changes. In today’s organizations, this is called revolution, and survival rates are low. 2. Contrast the differences between a stable and a hyper turbulent environment. Answer: Stable environment means unchanging basic products and services, competition, etc. A hyper turbulent or changing environment means rapidly changing products, competition, innovation, etc. 3. Compare and contrast the four types of management orientations used in relating to the environment. Answer: Reactive—waits until something happens, then reacts. Sluggish Thermostats—resists change and slow to adapt. Satisficing—does only what is necessary to get by, “good enough.” Renewal Transformation—looks ahead to prepare for change, makes necessary contingency plans in advance 4. Using companies who compete with one another (for example, Apple and Microsoft), position them on the adaptive orientation model in Figure 2.2. Support your position. Answer: In the adaptive orientation model: 1. Apple: Positioned as highly adaptive with a strong focus on innovation and design. Apple is known for its rapid product development cycles, integration of hardware and software, and creating new market categories, which reflects its proactive and dynamic adaptation to market trends. 2. Microsoft: Positioned as moderately adaptive. While Microsoft has shown adaptability, particularly with its shift to cloud computing and subscription models (e.g., Microsoft 365), it historically focused on steady improvement of existing products and maintaining a large market share, which reflects a more measured adaptive approach compared to Apple’s rapid innovation. These positions reflect each company’s strategies for responding to market changes and technological advancements. 5. Explain a sociotechnical system and its five components. Answer: An organization is an open system of coordinated human and technical activities. The functions and processes of the organization are not considered as isolated elements. Instead, they are parts reacting to and influencing the rest of the system. Its sociotechnical system’s five components are: The Goals and Values Subsystem - the basic mission and vision of the organization. The Technical Subsystem - the primary functions, activities, and operations used to produce the output of the system. The Structural Subsystem - the formal design, policies, and procedures. The Psychosocial Subsystem (culture) - the network of social relationships and behavioral patterns of members. The Managerial Subsystem - spans the entire organization by directing, organizing, and coordinating all activities toward the basic mission. 6. What lessons can future shock provide for organizations? Answer: Future shock is too much change in too short a time. Future shock affects both managers and organizations. Management’s capacity is strained when change occurs too rapidly. In order to overcome future shock, managers must become adaptable and flexible. Uncertainties brought on by future shock make accurate planning more difficult and plans sometimes become out of date before they can be fully implemented. Since life cycles of products and services are shortened, organizations must become more adaptive and be able to change quickly. This means that new forms and models of organizations are required in order to meet the changing conditions. KEY WORDS AND CONCEPTS Define and be able to use the following words and concepts: Client System - an organization employing a practitioner to assist them in planning change. (p. 44) Closed systems - exists only in theory; is self-contained and isolated from its environment. Content task of the group. (p. 39) Content - task of the group. (p. 45) Contingency approach - attempt to determine through “if-then” research the proper management technique to employ. (p. 41) Dynamic equilibrium - steady state, reacting with environment. (p. 39) Entropy - movement toward disorder and eventual termination of function. (p. 34) Feedback - results, reaction from behavior. (p. 39) Future shock - inability to cope with rapid change. (p. 42) Horizontal corporation - flattening the hierarchical organizational charts; reduction in layers of management. (p. 38) Hyper turbulent environment - rapid change. (p. 35) Open system - is interrelated and acts with its environment. (p. 39) Organization renewal - ongoing process of building innovation and adaptation into an organization. (p. 34) Organization transformation (OT) - process of coping with unplanned change by changing organization form or framework (revolution). (p. 43) Participant-observer - actively participate while being aware of group process. (p. 45) Process observation - technique used in examining groups that identifies separate dimensions (p. 45) Reactive management - waiting until something becomes a problem before reacting (p. 37) Renewing/transformational ¬management - plans for change; makes contingency plans. (p. 37) Satisficing management - does only what is necessary to get by; management that is adequate and average. (p. 37) Sluggish management - style of management based on low risk, formalized procedures, and high degree of structure and control. (p. 36) Sociotechnical System - an organization with an open system of coordinated human and technical activities with five major subsystems. (p. 40) Stable environment - characterized by unchanging basic products and services, static level of competition, low level of innovation, formalized and centralized structure, and steady rate of growth. (p. 35) System - set of interrelated elements unified to achieve a goal or purpose. (p. 38) Systems approach - set of interrelated elements unified to achieve a goal or purpose. (p. 33) Task activities - what the group does. (p. 45) Team process - how the group works and the relationships among team members. (p. 45) ADDITIONAL RESOURCES Readings: Amabile Teresa M. and Mukti Khaire, “Creativity and the Role of the Leader,” Harvard Business Review, October 2008, pp. 98-109. Hamel, Gary, The Future of Management, (Boston, MA: Harvard Business School Press, 2007.) Johnson, Deborah G. and Jameson M. Wetmore (editors), Technology and Society: Building Our Sociotechnical Future, (Cambridge MA: The MIT Press, 2009.) This is an edited book of readings on technology and society. Toffler, Alvin Future Shock, (New York, Random House, Inc., 1970.) Does this 1970 book still hold any truths and lessons for today’s managers? Ulrich, Dave, Steve Kerr, and Ron Ashkenas, The GE Work-Out: How to Implement GE’s Revolutionary Method for Busting Bureaucracy and Attacking Organizational Problems--Fast! (New York: McGraw Hill, 2002.) Video: The Pixar Story. (2007, available through Disney/Pixar, see www.thepixarstory.com) This is a documnatary of the history of Pixar Animation Studios. The film is a behind-the-sceens view of Pixar and includes footage from the Pixar library. Some of the key people interviewed are Steve Jobs, George Lucas, Roy Disney, John Lasseter, and Ed Catmull. In addition to a history of the company, the viewer learns about the culture and self-renewal capability of Pixar. This film fits well with this chapter on self-renewal. SIMULATION PROCEDURES Simulation 2.1 (p. 47) OD PRACTITIONER BEHAVIOR PROFILE I 1. Student premeeting preparation: a. Read the instructions. Before coming to class, complete Part A, Steps 1 and 2, which includes completing the Profile Survey, Profile Form, Class Performance Form, and Objectives Form. Familiarize yourself with the “Instructions for Developing OD Practitioner Roles and Skills” at the end of the simulation. 2. Suggestions: a. You might want to discuss briefly the idea of behavioral objectives (i.e., something you can do or demonstrate). b. Explain the role of the practitioner in Part B, Step 1. See the insert in the text, “Instruction for Developing Practitioner Roles and Skills.” c. You may have them use colored pens to create the Profile Form-one color for this chapter and another color when they complete the form in Chapter 16. d. Stress that all forms should be kept as they will be needed in chapter 16 when students will complete the profile at the end of the course. 3. Discussion points: a. The idea of goal setting. b. The awareness of a need for change. c. The possibility of growth. d. The difference between a specific behavioral objective and vague generalizations. e. The role of the practitioner. f. The long-term use of skills/career development. Total time suggested: 60 to 75 minutes You will need to adjust these times to fit your specific schedule and class plans. Minutes Part A before class Part B Step 1 45 to 60 Step 2 15 Total 60 to 75 Notes CASE TEACHING NOTES The NoGo Railroad (p. 56) I. Problems A. Macro 1. Union problems need to be addressed at corporate level. 2. Massive changes are needed in personnel policies that can only be accomplished through intensive union and executive sessions. 3. This organization may not survive the needed changes. There may not be time for organization development to be used and the revolutionary method—organization transformation—may be too radical. 4. Changes may not be allowed by management at this time. Change is inevitable and the longer that NoGo waits, the more radical those changes will be. B. Micro 1. Dave Keller is in a no-win situation. 2. The only hope Dave has of making all the needed changes would be to accomplish the needed changes over a long period of time with empowerment and support from top management. 3. In the short term, Dave can attempt to gain employee support. Because the union is so strong, it is doubtful that he can obtain much support. II. Causes 1. Union stronghold. 2. Company has been reacting to changes instead of proactively forecasting changes. 3. Management is not cohesive; they do not share information, support, or resources with employers and lower-level managers. III. Systems affected 1. Structural – job descriptions and the formal structure are very rigid, largely because of years of practice. 2. Psychosocial – Dave is very unsure of the security of his position and suspects he is being set up. Other employees, including some in management, want to preserve the status quo. 3. Technical – the technology has change through the years but the organization has failed to recognize the change. As evidence is the archaic job titles (fireman) and job descriptions. 4. Managerial – virtually no support from management for Dave to make changes. Management seems to be as much of the problem as unionized employees. Everyone seems to want to protect his or her turf. 5. Goals and values – though “status quo” is actually not a value, it never-the-less is what employees in many cases value. Their goal is not to change. IV. Alternatives 1. Dave can forge on ahead and suggest changes as he sees them. If top management does not begin to press for changes, the organization will probably cease to exist. 2. Management needs to consider what they will offer to unions prior to the next contract in order to make the following changes. a. Positions need to be eliminated. b. Positions need to be combined. c. Featherbedding and nepotism need to be eliminated from all levels of the organization. 3. Some proposed “carrots”: a. Management reduces unnecessary managerial and corporate staff as well as union positions. b. The Board of Directors ties future management and union pay raises together. Pay increases will also be tied to productivity and profits. 4. Management should consider confrontation with union. a. This alternative needs to be carefully considered. b. There would be the possibility of violent confrontations. c. There will be many legal ramifications and expenses incurred by both sides. d. Even if the company is successful in obtaining concessions from the union, the company may have future problems. In unpopulated areas such as Montana, Idaho, and Washington, future employees will probably have ties to former union railroad employees. V. Recommendations Dave should attempt to make the necessary changes for NoGo to become a healthy organization. Unless he is able to live with the old corporate culture, he will not be effective. When Dave is “fed up,” he will probably resign. Hopefully before that point, the company’s top management will become supportive of the needed change programs. Meanwhile, Dave needs to be realistic about his future and keep his resume up to date. STUDENT PREPARATIONS FOR THE NEXT CHAPTER 1. Read Chapter 3. 2. Prepare and read the instructions for OD Skills Simulation 3.1. Prior to class, form into teams of six and select roles. Complete Step 1. 3. Read and analyze Case: The Dim Lighting Co. Instructor Manual for An Experiential Approach to Organization Development Donald R. Brown 9780136106890