Lecture 3 Learning Outcomes Managing change / managing choice The trajectory process and change The assessment process and change From Commitment to decision making and risk

Organisational change and managerial choice ( Source Burnes Ch 11)

Managing choice Managing change What to change When to change How to change Whether to change.

Managing change Managing choice (Continued) The choice process – which is concerned with the nature, scope and focus of organisational decision-making. The trajectory process – which relates to an organisation’s past and future direction and is seen as the outcome of its vision, purpose and future objectives. The change process – which covers approaches to, mechanisms for achieving, and outcomes of change.

Figure 11.1 The Choice Management–Change Management model

The choice process Changing the rules Playing to the rules Ignoring the rules.

The choice process (Continued) Organisational Context Focus of choice Organisational Trajectory.

Figure 11.2 The choice process

Figure 11.3 Organisational trajectory Source: Adapted with permission from Mintzberg, H., Patterns in Strategy Formation, Management Science, 24(9), (1978). Copyright 1978, The Institute for Operations Research and the Management Sciences , 7240 Parkway Drive, Suite 300, Hanover, Maryland 21076

SWOT analysis What is a SWOT analysis? What does it do? SWOT stands for : Strengths (internal) Weaknesses (internal) Opportunities (external) Threats (external) What does it do? A SWOT analysis enables managers to identify the key internal and external issues they need to take into account in order to understand the context in which the organisation operates. Also, by identifying key issues, it begins to focus managers on the areas where they need to make choices, and helps to identify some of the constraints and risks involved.

PESTEL framework (as per lecture 1) What is the PESTEL Framework? PESTEL stands for: Political Economic Sociocultural Technological Environmental Legal What does it do? The PESTEL framework is a rigorous approach to identifying and understanding the main external environmental factors which affect an organisation. As with the SWOT analysis, it also plays a role in focus organisations on the choices open to them and the constraints and risks involved in these choices.

Note Different tools look at different things and usually give different answers.

Focus of choice Limited range of issues Style Short term Medium term Long term. Style Passive Reactive Proactive Co-ordinated Piecemeal.

Hoshin Kanri The word hoshin can be broken into two parts. The literal translation of ho is direction. The literal translation of shin is needle, so the word hoshin could translate into direction needle or the English equivalent of compass. The word kanri can also be broken into two parts. The first part, kan, translates into control or channeling. The second part, ri, translates into reason or logic. Taken altogether, hoshin kanri means management and control of the organization’s direction needle or focus. Total Quality Engineering Inc (2003)

Figure 11.4 Types of decision Source: Adapted from Rollinson (2002: 254)

The trajectory process The organisation’s career path: Where it has been Where it is Where it wants to go.

The trajectory process (Continued) Vision Strategy Change.

Figure 11.5 The trajectory process

Trajectory process Coherence Past Success Present Appropriateness Agreement on Future.

Constructing a vision The four elements of a vision Mission. This states the organisation’s major strategic purpose or reason for existing. It can indicate such factors as products, markets and core competencies. Valued outcomes. Visions about desired futures often include specific performance and human outcomes the organisation would like to achieve. These can include types of behaviour and levels of skill as well as more traditional outcomes such as turnover and profit. Valued conditions. This element of creating a vision involves specifying what the organisation should look like to achieve the valued outcomes. Mid-point goals. Mission and vision statements are by nature quite general and usually need to be fleshed out by identifying more concrete mid-point goals. These represent desirable organisational conditions but lie between the current state and the desired future state. Cummings and Huse (1989)

The change process Objectives and outcomes Planning the change People.

Figure 11.6 The change process

The trigger Vision/Strategy Current performance Opportunities Threats Action: Assessment.

The assessment remit Reasons Objectives Consequences Who to involve How to involve Timescale Resources.

The assessment process Clarification Alternatives Data collection Data analysis Feedback Recommendation Decision: – Yes / No / Maybe / Something else / Somewhere else.

The five characteristics of an effective activity plan Relevance: activities are clearly linked to the change goals and priorities. Specificity: activities are clearly identified rather than broadly generalized. Integration: the parts are closely connected. Chronology: there is a logical sequence of events. Adaptability: there are contingency plans for adjusting to unexpected forces. (Beckhard and Harris, 1987: 72)

A commitment plan A commitment plan is a strategy, described in a series of action steps, devised to secure the support of those [individuals and groups] which are vital to the change effort. The steps in developing a commitment plan are: Identify target individuals or groups whose commitment is necessary. Define the critical mass needed to ensure the effectiveness of the change. Develop a plan for getting the commitment of the critical mass. Develop a monitoring system to assess the progress. (Beckhard and Harris, 1987: 93)

People Creating a willingness to change Involving people Awareness : Feedback Involving people Communication & Involvement Sustaining momentum. Resources : change agents: new competencies

Choice and change Choice is constrained but it exists Change can open up choices Change can close off choices Change has to be managed Choice has to be managed.

An overview of Decision Making themes Figure 7.1 Overview of decision making in organisations

How decisions affect value People make choices about limited resources Inputs (where to raise capital, who to employ) Transformation (how to make a product) Outputs (what price to charge) These choices affect the value added (if any) Significant choices are usually opaque, ambiguous and shaped by subjective interpretations

Decision-making conditions Certainty all info. available (interest rates example) Risk enough info. to estimate (loans example) Uncertainty goals clear, but lack info. to decide action (e.g. competitors’ reactions) Ambiguity goals AND how to reach them unclear (e.g. broad strategic issues where people disagree over mission)

Degree of uncertainty and decision-making type Figure 7.6 Degree of uncertainty and decision-making type Source: Adapted from Daft (2000), p.271

Vroom and Yetton’s decision tree Figure 7.8 Vroom and Yetton’s decision tree Source: Reprinted from Vroom and Yetton (1973), p. 188 by permission of the University of Pittsburgh of the University of Pittsburgh Press, copyright © 1973 by University of Pittsburgh Press..

Case Study

Supplementary Material

(Iterative) tasks in making decisions Figure 7.2 Tasks in making decisions

Types of decision and organisational level Figure 7.4 Types of decision, types of problem and level in the organisation Source: Robbins, Stephen p., Coulter, Mary, Management, 8th edition, © 2005. Reprinted by permission of Pearson Education, Inc. Upper Saddle River, NJ

Dependent or independent Figure 7.5 Possible relationships between decisions Source: Cooke and Slack (1991), p.24

Programmed and non-programmed Programmed decisions (Simon, 1960) Familiar, structured problems, info. known Resolve by procedures, rules, policies, quantitative analysis Non-programmed decisions Unfamiliar, unique problem, info. unclear and open to interpretation Resolution depends on judgement, intuition, negotiation, creativity – e.g. Deutsche Bank

Biases in making decisions Complex decisions mean we use shortcuts – rules which simplify complexity. These lead to biases: Prior hypothesis Select information which supports previous beliefs Representativeness Generalise from small sample Illusion of control Overestimate chances of favourable outcome Escalating commitment Put in more resources despite evidence of failure

Participation in decision making Vroom and Yetton (1973) developed a contingency model of decision making – i.e. the extent to which it is wise to involve subordinates in decision depends on the circumstances Section 7.7 outlines the five decision styles, and eight situational factors – Fig. 7. 8