CH-4-5 What to Change? A Diagnostic Approach – Managing Organizational Change: A Multiple Perspectives Approach : Book Guide

This Document Contains Chapters 4 to 5 Chapter 4 What to Change? A Diagnostic Approach Learning Objectives On completion of this chapter you should be able to: • Understand the use of diagnostic models in planning organizational change. • Use strategic analysis tools to assess the need for organizational change. • Diagnose organizational receptiveness to and individual readiness for change • Explain the characteristics of the “built-to-change” organizational model and assess the applicability, strengths, and limitations of this approach. Chapter Summary This chapter focuses on the use of diagnostic tools of change. It summarizes a number of models and assesses their applicability to various aspects of change. Images Diagnostic Tools Director Using diagnostic tools to build up your own knowledge base and confidence about what needs to change by using models that specify relationships among variables and pinpoint where change is needed when things are not going well. Navigator You will find the diagnostic tools attractive—models are ways of “mapping” the environment they describe. Caretaker You will be less convinced of the capacity of the diagnostic tools to support radical change, but several of the tools (see PESTEL and scenario analysis) provide insights into the trends in the external environment that you will have to take into account. Coach You will focus on the diagnostic tools that highlight the goals being sought and the competencies needed to attain them Interpreter You will be attracted to the diagnostic tools that emphasize images, framing, and cognitive maps Nurturer Having an interest in emergent strategy, you may remain unconvinced as to the value of such diagnostic tools. Diagnostic tools can be useful (Burke 2013) because of their ability to: 1. Simplify complexity in a situation where thousands of different things are “going on” by reducing that situation to a manageable number of categories. 2. Highlighting priorities by helping identify which aspects of an organization’s activities or properties are those most needing attention. 3. Identifying interdependencies by highlighting the interconnectedness of various organizational properties (e.g., strategy and structure). 4. Providing a common “language”—specific ideas and concepts—with which to discuss organizational characteristics. 5. Offering a process guide with regard to the sequence of actions to take in a change situation. First, we look at models that deal with the functioning of organizations as a whole. Typically, they focus on organizational performance. The organizational models that we cover in this textbook are: • The Six-Box Organizational Model: The key focus here is on six variables—purpose, structure, rewards, helpful mechanisms, relationship, and leadership. This model is useful to maintain awareness of all areas for consideration even though one variable may be identified as the main area for attention. • The 7-S Framework: This focuses on seven key components that affect organizational effectiveness—structure, systems, style, staff, skills, strategy, and superordinate goals. The interconnectedness of these variables is vital to the success of change. • The Star Model: An organization is effective when the five components of organizational design—strategy, structure, processes and later capability, reward systems, and people practices—are in alignment. • The Four-Frame Model: This offers four frames for the managers to conceptualize how the organization operates. These frames are structural, human resource, political, and symbolic frames. Second, we look at models which emphasise the strategy-organizational change relationship: • Gap Analysis: This is a tool used for reviewing the organization’s position based on where they are, where they want to get to, and what they need to do to get there. • The PESTLE Framework: This analyses the external environment in terms of six factors—political, economic, social, technological, legal, and ecological. • Scenario Planning: Creating stories of possible future scenarios that are considered to be vital to the future of the organization • Elements of Strategy: These are five elements of strategy that are considered mutually reinforcing—arenas, vehicles, differentiators, staging and lowest costs through scale advantage. Any misalignment of these signifies the need for change. • The Strategic Inventory: This aims to identify the strategic assumptions of managers and determine their consistency with the business environment. This determines whether the strategy should be a focal point for change. • The Cultural Web: This provides a way of mapping the organizational culture through seven elements—paradigm, rituals and routines, stories, symbols, control systems, power structures and organizational structure. • Structural Dilemmas: Six possible structural dilemmas that can be encountered during change are diagnosed so areas that have been “traded off” during the change process can be identified • The Boundaryless Organization: Success is arguably achieved only if four types of organizational boundaries are diagnosed and reduced. These are vertical, horizontal, external, and geographical boundaries. Third, we look at models that provide a diagnosis of readiness for change. Assessing the organization’s readiness to change is also important and can be seen as a mediating variable between change management strategies and the outcomes of desired strategies. Thus, a prechange audit of the readiness of an organization for change can provide an indication of the likely outcome of a change initiative at a particular point in time. Some ways of doing this include: • The Receptive Organizational Context: This approach identifies a number of ‘conditions’ which determine how ready an organization’s members are to change, and the actions that can be taken to improve receptiveness. • Absorptive Capacity: This approach focuses on an organization’s capability to create and use new knowledge in a way that improves organizational performance. • The Innovative Organization: This approach identifies factors that encourage innovation. • Force-field analysis: This identifies factors that are driving forces for change as well as restraining forces. • Individual Readiness for Change: Treats individual readiness as an attitude that has both cognitive and emotional dimensions. • Stakeholder Analysis: This focuses on the position of stakeholders in the change process and allows the manager to be better informed of how to confront potential issues. The chapter concludes with a discussion of the concept of ‘Built-to-Change,’ which contrasts the organizational design principles characteristics of the traditional work organization with those of an organization which is designed to be continually evolve. Sidebars in the Text The following table provides a brief summary of the key points in each sidebar. Sidebar Page Applying 7S to Intuit • at Intuit there was a problem with the internal processes and used the 7S Model to diagnose the changes necessary • Students can see how change can be orchestrated in line with the issues identified and can be successful in improving performance. 105 Metaphorical Diagnostics • Images and metaphors are powerful tools for analysing situations and issues • This approach can be used as an effective ‘ice-breaker’ in class, or in an executive education program. Participants could use this tool in a group exercise focusing first on a well-known organization before applying this approach to their own organization. First, ask participants to provide their image. Second, ask them what it is about the organization that they are trying to convey through the image. 108 Scenario Planning in a High-Risk World, to 2018 • Gives a sense of the sort of factors managers are likely to include in a scenario analysis. 111 Assumptions and Strategy: Strategic Drift and the Beech Starship • Errors in judgement are most powerfully illustrated with stories that show how problems can occur. • Using this story as a starting point, students could be challenged to think of other examples of business decisions based on assumptions that were incorrect—either from articles in the press or from their own experience. 114 Charlie’s Angels and the Red Star Corporation • See Debrief on p.133-134. 119 Rules for Stifling Innovation • A somewhat tongue-in-cheek list of actions that managers can take if the intention is to discourage innovative behavior within their organization. 120 Designed Not to Change • A brief reflection on the design principles behind the structure of the classic business organization and why deep change is a challenge for them. 125 Exercises and Answers EXERCISE 4.1 (pp.125-127) Case Analysis: The Capital One Financial story Our suggested responses to the four case questions are: 1. The ‘built-to-change’ model has been promoted as desirable for most, if not all organizations. However, from a corporate management perspective, what are potential disadvantages of developing a built-to-change organization? Answer: This model could have four disadvantages, from a management viewpoint. First, there are costs involved in redesigning an organization with the elements described in table 4.6. These costs relate to training and development, redesigned rewards and bonus payments, and new information systems. Second, this approach could lead to unnecessary, and perhaps disruptive, changes. Third, management may lose control of the overall corporate change agenda, including the costs involved, with the danger of wasteful overlap. Fourth, it may be difficult to revert to a more directive management style should that be necessary to address a crisis. Potential disadvantages of developing a built-to-change organization include increased complexity in management, potential for constant disruption and employee burnout, difficulty in maintaining a consistent strategic focus, and the challenge of balancing flexibility with stability. Additionally, continuous change can lead to uncertainty and resistance among employees, potentially impacting overall morale and productivity. 2. From the perspective of an individual employee, what are the benefits of working in a built-to-change organization? Answer: Working in a successful built-to-change organization has at least three potential benefits. The first concerns the probability of greater financial reward, through performance bonuses and promotion. Second, involvement in driving change can lead to significant personal development. Third, working in this kind of context can be challenging, motivating, and fun. For an individual employee, benefits of working in a built-to-change organization include increased opportunities for learning and growth, exposure to diverse experiences and innovative practices, and a dynamic work environment that can be more engaging and stimulating. Additionally, employees may have greater chances for career advancement as the organization adapts and evolves. 3. For the individual employee, what are the potential disadvantages of working in a built-to-change organization? Answer: The disadvantages include constant uncertainty for which some people have a low tolerance, the potential for exhaustion, and a deteriorating work-life balance. Potential disadvantages for an individual employee include job instability due to frequent changes, higher stress levels from constant adaptation, and potential difficulties in maintaining work-life balance. Employees may also face uncertainty about their roles and career paths, which can affect job satisfaction and security. 4. Capital One Financial operates in a fast-moving sector. To what extent will built-to-change design principles apply to organizations in other industries with different environments? Answer: Management and staff in most organizations would today probably argue that they, too, operate in fast-moving environments—from auto-manufacturing to healthcare, from retail store to higher education. The built-to-change model thus appears to have widespread appeal. However, Worley and Lawler do not discuss this model in terms of a continuum, where an organization could be built-to-change more or less often. Considering the design principles in table 4.6, it may be appropriate for an organization to adopt the talent management and reward systems elements, but not the other components. On the other hand, given the issues facing an organization, the structural and information systems elements may be more relevant. It may also be appropriate for different units or divisions in an organization to be designed differently; built-to-change may be desirable or even necessary in some areas, while this would be disruptive in more stable, slowly changing parts of the business. It is easy to forget in this discussion that the ‘environment’ for some units or divisions in an organization may be other parts of the organization, and not the outside world. Built-to-change design principles are versatile but their applicability varies by industry. In fast-moving sectors like finance or tech, where rapid adaptation is crucial, these principles are highly relevant. In more stable or regulated industries, the need for constant change may be less critical, though flexibility and adaptability can still provide competitive advantages. The extent of application depends on the industry’s pace of change, competitive pressures, and regulatory environment. EXERCISE 4.2 (p.127) Scenario Planning Purpose To give students some experience with Scenario Planning as a diagnostic tool. Options/Techniques/Requirements Format: • Individual or small groups of two to three students. Materials: • Select an organization. Time Required: Once the organization is selected, the student will need time to think through the five “key drivers” for that company, although the more familiar a student is with the company the easier it will be to identify the drivers. The longest time will be that spent on the creation of the scenarios. This exercise could take a couple of hours as quite a lot of time will be needed for the scenario building once the drivers are identified. Undergraduate: Students may have some difficulty in identifying “key drivers”, depending on their exposure to business studies. This could be modified to be a group exercise, with the groups composed of students from differing study majors (if possible) so to give a range of experience and knowledge for the group to draw on. MBA/Executive: Students with professional experience would probably be more aware of “key drivers.” They may need to have some encouragement for the scenario planning, depending on their level of experience with case study analysis. Potential Problems and Helpful Hints • Identification of “key drivers” may take some time for the students with less business experience. • The writing of a scenario could be modified to point form to place the importance on the information, rather than “a good story,” although students with the skill to capture the information in a story will be developing their communication skills. • Students may find 100 words or less to be restricting for the writing of each scenario. Developing the skill to capture information and restrict the “story” to this size is a valuable skill to learn. The equivalent in business is the “elevator pitch” that entrepreneurs or skilled networkers use to promote their ideas or business. Debriefing A helpful approach would be to talk through with the class the type of drivers they identified in the different business to help increase the awareness of the selection available. Students will tend to name drivers they relate to from their educational or business experience, and it would be a good challenge to have them consider what the drivers would be for differing types of managers e.g. human resource manager, accountant, lawyer, supply chain manager, CEO. The reason for this approach is that the change manager will need to be conversant with the “key drivers” (and priorities) from the perspective of the major stakeholders in an organization. EXERCISE 4.3 (pp.128-130) Readiness for Change Analysis Purpose To give students experience applying a readiness for change diagnostic tool. Options/Techniques/Requirements Format: • Individual or small groups of two to three students. Materials: • Select an organization. Time Required: Once the organization is selected, the students will need time to think through the answers to the 20 questions. If the organization is described in a written document, build in time for reading the document (unless reading is expected prior to class). Suggested time to complete the questions is 20 minutes if each person is answering individually but will need to be at least doubled if the responses are from groups (i.e., build in time to allow some group discussion). Undergraduate: Students may have difficulty being confident of their answers, depending on their exposure to business studies. This could be modified to be a group exercise, with the groups composed of students from differing study majors (if possible) so to give a range of experience and knowledge for the group to draw on. MBA/Executive: Students with professional experience would probably be more aware of the grounds upon which they could answer each question. Potential Problems and Helpful Hints Use differences of opinion between students/participants as a teaching resource. That is, it is very common for people in organizations at a time of organizational change to see things differently, to arrive at different conclusions about what is being done, what should be done, and why. Divergence of opinion within class is a good thing to have emerge, because it can be treated as mimicking exactly what often happens “in the real world.” Debriefing It is often helpful to present the diagnostic model as a catalyst for discussion, rather than an instrument for measuring some objective reality. That is, it captures thinking by various stakeholders about key elements relevant to the change process. For example, if there is an overwhelming opinion that clear success criteria for success have not been identified, it is this belief that needs to be addressed even if the advocates of change believe that such criteria have been identified. Perceptions become the reality for the perceivers. A useful response to such a mass perception would be to investigate whether such criteria are in fact underdeveloped or whether the problem is more one of inadequate communication of their existence. That is, regardless of whether the diagnostic tool answers show a high degree of agreement amongst participants, or a great divergence of opinion, the Instructor can make use of the outcome to form a link with change themes. Chapter 5 What Changes and What Doesn’t? Learning Objectives On completion of this chapter you should be able to: • Explain several different ways of categorizing different types of change. • Identify practical implications of different types of change for the change manager. • Understand the distinction between sustaining and disruptive innovation, and explain the practical implications of this distinction for change management. • Assess the significance of organizational culture with regard to organizational performance and reputation, and the role of leaders as culture architects. • Assess the potential impact of new digital technologies in general, and the potential organizational benefits of applications of social media in particular. Chapter Summary This chapter begins by introducing a range of concepts used to describe the nature of change, specifically (i) emergent change and planned change, (ii) incremental change and transformational change, and (iii) first-order, second-order and third-order change. Some implications flowing from these concepts and links to images of managing change are shown in the following table. Implication for Change Manager Image of Managing Change 1. Care needs to be taken in assuming that types of organizational changes can be neatly categorized as small, adaptive, and incremental compared to those that are large and transformational. A restructure in one section of an organization may be seen as small scale and adaptive by people elsewhere in the organization who are relatively unaffected by it. Interpreter: The change manager as interpreter image reminds us that whether a change is adaptive, reactive, or transforming will depend upon the perspective of the person doing the considering—and part of the role of the manager of change is to mold these perspectives or provide “sense making” for organizational participants about “what is going on here.” 2. Multiple types of changes simultaneously should also be considered. In addition, some changes require other changes nested under them in order for another change to proceed. Individually, each change may be seen to be achievable and relatively small scale (depending upon your perspective), but together they may be seen as transformational, even revolutionary. Navigator: When implementing multiple changes, there is likely to be contact with different groups, interests, and power relationships within their organization that will require negotiation and navigation through a range of issues—not all of which they will be able to control. 3. From chaos theory, we know that small changes, at an individual level, may have larger, unanticipated consequences throughout the organization Nurturer: Change managers can nurture and shape people’s perceptions and reactions to change but not control them. What might seem to be a small, inconsequential change may have radical consequences that change managers may not be able to anticipate 4. There are a number of inertial forces that act as a drag on individuals and organizations in adopting adaptive, first-order change. Providing the conditions for the exercise of personal initiative becomes an important focus for change managers who wish to cultivate change through the exercise of frontline staff. Coach: the managers of change are likely to assume that, as long as people have been well “coached” in a variety of organizational and team skills, then, when organizational “problems” are triggered, they will take the initiative and make appropriate adaptive changes to alter organizational practices and routines. 5. Change managers need to remember what might appear at first sight to be a paradox, that often change is needed in order to remain stable. This can be seen as another way of framing the fundamental paradox of stability and change where change may be needed to preserve or re-establish stability and stability must include change mechanisms to be adaptable. Director: Change managers who adopt a directing image of change also need to remember that they will need to provide directions about stability: telling people what will not be changing, or what will remain the same. 6. Change may mean adding on to, and integrating, rather than removing and replacing current practices. What this reminds the managers of change is that they need to assess how carrying out a change will impact upon current practices 7. There is often an implicit assumption that incremental, adaptive changes are less risky than large, second-order transformational changes. An alternative position is that staying the same is risky. For the manager of change, this requires both assessing the scale of change (incremental/radical) from the perspective of the affected parties as well as assessing the risk involved (of changing rather than staying the same) and the different ways in which risk can be ameliorated. The chapter then moves on to discuss three arenas that can be at the core of change in organizations and the inherent challenges associated with them: 1. Innovation: 2. Organizational Culture 3. Technology Sidebars in the Text The following table provides a brief summary of the content of each sidebar. Vignette Page What Changed at Barclay’s Bank • Provides an example of a situation where the organization’s culture (‘arrogant and selfish’) was blamed for actions that had gotten the organization into trouble in the past. • A new ‘values driven’ code of conduct was developed with the intention that a cultural shift occur in the organization. • The Barclay’s case could be used as the basis for a discussion on how influential statements about desired culture can be in determining the actual/lived culture of an organization. 141 How to Choose Your Thrust and Limit Your Agenda • Emphasises the importance of prioritisation and provides six criteria that can assist in the prioritisation process. 144 Disruptive Innovation in the Nineteenth Century • Provides an example of how the initial reaction to a new product/service/ business model is scepticism as to its impact on existing practices. • Provides an opportunity to emphasise to students that experts are not immune from ‘getting it wrong’ when it comes to predicting the future even in their field of expertise. The history of the development of new technologies provides many such examples. Students often enjoy hearing a few examples, such as: “This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.” (Western Union, 1876) “Heavier than air flying machines are impossible.” (Lord Kelvin, President, Royal Society, 1895) “There is no likelihood man can ever tap the power of the atom.” (Robert Millkan, Nobel Prize in Physics, 1923) “Who the hell wants to hear actors talk?” (Harry Warner, Warner Bros Pictures, 1927) “There is no reason why anyone would want a computer in their home.” (Ken Olson, President & founder, Digital Equipment Corp., 1977) “640K ought to be enough (memory) for anyone.” (Bill Gates, 1981). 147 Not a Good Kodak Moment • The story of Kodak provides a great insight into how ‘disruptive’ rather than ‘sustaining’ innovations can be less attractive to those firms that are currently the high performers. If one is doing well, innovating to improve current products is often seen as a lot less risky a strategy than ditching the status quo to invest in some radically different product. Therefore, disruptive innovation often originates in newcomers with much less investment in the status quo. 149 Yang Yuanqing, Chief Executive of Lenovo • Illustrates the steps taken in one organization to encourage the type of culture that they want to have and in doing so reinforces the point that culture cannot be legislated (‘culture by edict’) but is something that emerges as a result of facilitating conditions. If managers want to have a particular sort of culture to characterise their organization, they need to think about what practices will encourage its development. 151 Risky Culture • This vignette opens up an opportunity to discuss organizational culture in a context with which many students/participants will be familiar, if not through being in the business world at the time of the global financial crisis (GFC) then through movies such as Inside Job (2010) and The Big Short (2015). • A key element in the nature of any culture is what behaviors get rewarded. A statement about the desired culture of an organization will have little effect if it is inconsistent with the behaviors that get rewarded (income, status, reputation, promotion, etc). • The other side of reward is punishment—if behaviors that an organization espouses as not representative of the culture it wants are not consistently punished, the ‘deviant’ behavior will very probably continue (especially if not only is it not punished, it continues to be rewarded). 154 Culture Change Starts with You • Provides an example of a business where it was recognised that one of the most effective ways of sabotaging an attempt to change the culture of an organization is for its managers to say one thing but do something else. People in an organization are very quick to spot an inconsistency between what their managers say and what they do, and such perceived hypocrisy can destroy the credibility and effectiveness of any attempt at culture change. 155 Oscar de la Renta and Instagram • Provides an example of how social media is changing traditional organizational practices. 159 Exercises and Answers EXERCISE 5.1 (p.161-162) Case Study Analysis: The Nampak story Our suggested responses to the three case questions are: 1. Which dimensions of the 7-S framework, described in chapter 4, did Eric Collins and his senior management colleagues focus on in order to change Nampak’s culture? Answer: Collins met with employees to hear their views, mainly grievances Wright-Smith ran focus groups asking staff what should change staff staff training and development opportunities were improved line management feedback to staff was significantly improved senior leaders programs and fast-track for high potentials developed skills skills skills Collins demonstrated ‘listening leadership’ style corporate responsibility program with links to local schools shared values a new performance management system was introduced systems This culture change program relied mainly on the ‘soft’ factors in the 7-S framework: staff, skills, style, and shared values. The one system change, concerning performance management, could also be described in staff and skills terms. The only costs of this program involved management time. 2. Which dimensions of the 7-S framework were not affected? Answer: No changes were made to strategy and structure, and no other new systems were introduced. 3. Where does this culture change initiative belong on the ‘depth’ scale in figure 5.1? In your judgement, would a different emphasis across the seven factors have produced deeper change, with better results, and how? Answer: There is no evidence to suggest that Nampak’s business model and organization structure required deep change or transformation. In combination, this was a mid-range package of changes. Deeper and more profound changes may have been destabilizing and produced poorer results. The culture change initiative likely falls in the middle of the 'depth' scale in Figure 5.1, indicating moderate change. A different emphasis across the seven factors could have produced deeper change with better results by addressing more fundamental aspects such as leadership commitment, employee engagement, and alignment of systems and structures with the desired culture. Enhancing focus on these factors could drive more profound and sustainable changes in organizational culture. EXERCISE 5.2 (p.162) Organizational Culture Assessment Purpose This exercise is designed to help students apply the concept of organizational culture to an organization by focusing not on a written case study but on an organization with which they are familiar. Options/Techniques/Requirements Format: • Individual or groups Materials: • Ch. 5 coverage of organizational culture (p.150-155) • The Cultural Web diagnostic model (Ch. 4, p.115-117) • Organization to analyze Time Required: Deciding on an organization to analyse from a culture perspective may take a while for some students. It may help to explain the exercise at the end of one lecture and then run the exercise in the next lecture so students have a few days to select the organization. Suggested time for the exercise once the organization is selected is 40 minutes. Undergraduate: Students may need some time to select an organization hence the value of advanced notice (see above). If few students have had enough depth of involvement with any one organization to be able to select one for this exercise, it may be necessary for the instructor to tell the students that they may choose any organization including those with which they have no personal familiarity. This approach could be aided by the instructor suggesting sources (e.g. Fortune, Business Week) where stories about the culture of specific organizations may be found. MBA/Executive: Students with professional experience will probably have experienced the organizational culture of one or more organizations. Potential Problems and Helpful Hints • If doing this exercise in groups and if each group is to report back to the class as a whole, it may be best (in the interest of time) to get each group to select just one case to report. • Some people who find it hard to decide on the right sets of words to capture the essence of an organization’s culture respond very well if invited to characterize the organizational culture through an image as described in the Metaphorical Diagnostics vignette (Ch. 4, p.108). A positive by-product of the use of a metaphor/simile to characterize an organization is that it almost always leads to a more relaxed atmosphere as both the ‘image creator’ and their ‘audience’ often respond enthusiastically, especially if some colourful images are selected (e.g. my organization is like ‘Modern Family,’ or my organization is like ‘Lord of the Rings.’ Guidelines for Answering Questions 1. What words would you use to describe the positive and negative dimensions of your organization’s culture, or an organization with which you are familiar? Answer: Encourage students to come up with some key adjectives or, if they find it easier, an evocative image (see notes above). Positive dimensions: collaborative, innovative, supportive, transparent, and adaptable. Negative dimensions: hierarchical, resistant to change, siloed, opaque, and disengaged. 2. How can you explain the negative aspects of that organizational culture? Why have those dimensions developed in that way? What factors are causing, supporting, or reinforcing those dimensions? Answer: Cultural features tend to exist because they are reinforced. Sometimes the problem may be that aspects of a culture that were very productive in the past, cease to be when the environment changes. Sometimes organizational practices, including those around recruiting and rewarding people, are slow to catch up, so the old and maybe non-dysfunctional cultural values continue to be reinforced. The symbolism attached to how senior managers behave is also a key place to look for answers. Negative aspects of organizational culture, such as being hierarchical or resistant to change, may develop due to outdated management practices, lack of leadership support for innovation, or entrenched power structures. These dimensions often arise from historical practices, insufficient communication, and a lack of mechanisms for employee feedback. Factors causing or reinforcing these dimensions include poor change management, limited opportunities for cross-departmental collaboration, and inadequate training or support for adapting to new processes. 4. What are the consequences of the negative dimensions of this organizational culture? In what way are they harmful to the organization, its employees, suppliers, and customers? Answer: Look at such factors as product quality, the quality of customer service, innovative capacity, reputational damage, employee turnover, difficulty attracting top quality people to the organization, ‘short-termism’ (e.g., rewarding of behaviour that is not in the organization’s long-term interest). 5. What actions can you take to change the dysfunctional aspects of the culture? The 7-S framework (Chapter 4) is a good place to start. What changes need to be made to the “hard” factors: strategy, structure, systems? What changes need to be made to the “soft” factors: style, staff, skills, shared values? How does senior leadership behaviour have to change? Answer: Have the students apply the 7-S framework (or some other systematic approach) and see what that reveals. Note that culture change sometimes occurs by “transplant,” that is bringing into the organization people who are already acting according to the cultural values that the organization wished to encourage. One reason for doing this is that such a transplant may be, or is at least believed to be, both quicker and more effective than trying to change the behaviors of existing employees. Hard factors: • Strategy: Align strategy with a focus on innovation and adaptability. • Structure: Flatten hierarchies to promote collaboration and decision-making. • Systems: Implement processes that support feedback and continuous improvement. Soft factors: • Style: Shift leadership style to be more inclusive and supportive. • Staff: Develop and hire employees who are adaptable and open to change. • Skills: Invest in training to build skills relevant to the new culture. • Shared values: Cultivate values that emphasize flexibility, collaboration, and innovation. Senior leadership behavior: • Leadership must model desired behaviors, actively support cultural changes, and foster an environment of trust and openness to guide and inspire the organization through the transition. 6. What would those actions cost? Answer: It is interesting to see whether students, when presented with this question, interpret it as just about financial cost. If so, they might subsequently be encouraged to consider also non-financial costs such as morale (although, in a debrief, the positive morale effect of a well-regarded culture change should be noted). Financial cost can vary enormously depending on how comprehensive the required change. In an MBA/Executive group there may be those with some familiarity with the cost of a culture change program in an organization where they have been employed. A cost of well into the hundreds of thousands of dollars would be quite standard, and in excess of one million not unusual in a large organization. EXERCISE 5.3 (p.163) How Will the Digital Revolution Affect Your Organization? Purpose This exercise is designed to help students apply the current and potential future impact of digitalization and social media to a hypothetical organization. Options/Techniques/Requirements Format: • Individual or groups Materials: • Ch 5 coverage of the impact of digitalization and applications of social media (pp156-160). Time Required: • 1 hr per briefing. Undergraduate: Students’ lack of business experience may make it more difficult with the aspect of the scenario that requires the existing organization to be characterised. However, this may be compensated for by their greater awareness of the digital world and social media which should assistant in their conceptualising of new possibilities for the creation of businesses. MBA/Executive: Students with professional experience should be able to quickly flesh-out the characteristics of the existing organization but are likely to vary considerably with regard to capacity to portray in any detail the characteristics of a hypothetical digital and social media competitor. Potential Problems and Helpful Hints • This is an exercise best undertaken by students who have had some exposure to basic business strategy concepts. Without this exposure, the task of constructing an alternative business model will be very challenging. • The exercise presents a scenario that needs to be developed. A hypothetical organization would meet the requirements of the exercise although a real organization could be used (as the existing organization). One form of the latter would be for instructors to provide the example of the established/traditional organization. • If students have not already been sufficiently exposed to the concept of business model or needed to reinforce their understanding of the concept, it would be helpful to provide them with a reference to a source (e.g. journal article) that deals with the basic characteristics of a business model. Guidelines for Answering Briefings 1 and 2. Briefing 1 asks the students to: Describe your new business model. What digital tools and social media technologies will you use to attract customers or clients from your previous employer to your business – and perhaps from other organizations in the sector? How quickly can you set up this business? What will it cost you to set up this business? Answer: The answer needs to show an understanding of (i) the concept of business model and (ii) the potential of various digital technologies and social media, then to link the two in articulating how a new business would seek to out-compete the established player. The questions on timing and cost are there to emphasise the importance of taking into account more than just technological capability; students are not expected to be able to accurately judge either of these factors. Briefing 2 asks students: How can your organization respond to that threat? Better still, how can your organization counter that threat before that merges? Answer: To respond to a threat, your organization can proactively assess and strengthen its competitive position through strategic actions such as enhancing innovation, improving operational efficiency, and differentiating products or services. To counter the threat before it emerges, focus on anticipating market changes, investing in research and development, building strong customer relationships, and diversifying offerings to mitigate risks and stay ahead of potential competitors. Draw up an internal action plan for transforming the organization’s current business model, or for creating a separate unit or division to develop your new business model alongside the existing one. Answer: To answer these questions the student has to change perspective from that of the challenger-firm to that of the incumbent firm. As in responding to Briefing 1, the answer needs to show an understanding of (i) the concept of business model and (ii) the potential of various digital technologies and social media, then to link the two in articulating how an incumbent firm would seek to out-maneuver the challenger. Internal Action Plan: 1. Assessment: Evaluate current model and market opportunities. 2. Strategy: Define goals and develop a strategic plan. 3. Structure: Form a dedicated team or unit for the new model. 4. Processes: Implement new systems and processes. 5. Culture: Promote innovation and provide necessary training. 6. Communication: Keep stakeholders informed and gather feedback. 7. Implementation: Execute in phases and monitor progress. 8. Review: Assess effectiveness and make continuous improvements. Solution Manual for Managing Organizational Change: A Multiple Perspectives Approach Ian Palmer, Richard Dunford, David Buchanan 9780073530536, 9780073404998