Managing Organizational Transformations Dr. Fred Mugambi Mwirigi JKUAT

"... the race is not to the swift, nor the battle to the strong, nor bread to the wise, nor riches to the intelligent, nor favor to the men of skill; but time and chance happen to them all." Ecclesiastes 9:11

What is Organizational Transformation? Organization transformation implies radical changes in how members perceive, think, and behave at work. These changes go far beyond making the existing organization better or fine-tuning the status quo. They are concerned with fundamentally altering the organizational assumptions about its functioning and how it relates to the environment.

Contd. Changing these assumptions entails significant shifts in corporate philosophy and values and in the numerous structures and organizational arrangements that shape members' behaviors. Not only is the magnitude of change greater, but the change fundamentally alters the qualitative nature of the organization.

Contd. The process of transformation is essentially a death-and-rebirth process It is a movement from what is to what is not but should be The movement must begin with a change of mindset Only then can the organization begin a shift

It’s a movement… it begins in the mind! Open and receptive mindsets Closed-up status- quo-oriented Mindsets

It’s a movement… Focused Growth with clear objectives And milestones Wild Growth/ existence

It’s a movement… Growing and sustainable Resource Base Shrinking Resource Base

De-motivated inactive It’s a movement… Engaged and motivated workforce De-motivated inactive Workforce

It’s a movement… Cutting edge Objective-driven technologies Ineffective and inefficient technologies

It’s a movement… Flat efficient Structures Hierarchical Bureaucratic

It’s a movement… Team Performance Individualistic performance

It’s a movement… Market Leadership Orientation Market Irrelevance

Identifying necessary change Brainstorming sessions Diagnostic consultancy Structured management meetings Research

Some Models of Change

Kurt Lewin’s Change Model Unfreeze Change Refreeze

Lewin’s Model

Lewin’s Model Explained The Unfreeze Stage: When a structure has been in place for a while, habits and routine have naturally settled in. The organization as a whole is going in the right direction, but people or processes may have strayed off course. Tasks that are not relevant or useful anymore are still being performed by force of habit, without anyone questioning their legitimacy. Similarly, people might have learned to do things one way, without considering other, more efficient methods. Unfreezing means getting people to gain perspective on their day-to-day activities, unlearn their bad habits, and open up to new ways of reaching their objectives. Basically, the current practices and processes have to be reassessed in order for the wheels of change to be set in motion.

Change stage: Once team members have opened up their minds, change can start. The change process can be a very dynamic one and, if it is to be effective, it will probably take some time and involve a transition period. In order to gain efficiency, people will have to take on new tasks and responsibilities, which entails a learning curve that will at first slow the organization down. A change process has to be viewed as an investment, both in terms of time and the allocation of resources After the new organization and processes have been rolled out, a certain chaos might ensue, but that is the price to pay in order to attain enhanced effectiveness within the structure.

Refreeze Stage: Change will only reach its full effect if it’s made permanent. Once the organizational changes have been made and the structure has regained its effectiveness, every effort must be made to cement them and make sure the new organization becomes the standard Further changes will be made down the line, but once the structure has found a way to improve the way it conducts its operations, “re-freezing” will give the people the opportunity to thrive in the new organization and take full advantage of the change.

A different View Set-the-Bar Motivate Change Sustain Change Scale the

Michael Watkins and Genesis Model

McKinsey Model

McKinsey Model- Key Questions Values – What are the core values and how do we communicate them? Strategy – What do we want to achieve? Structure – How is the organization structured and how does it communicate? Systems – How do systems and processes help us to keep on track? Style – How participative and effective is our leadership? Staff – Do we have the right people in the right place? Skills – What skills do we have and where are the gaps? If something isn’t working, it is likely to be because there are inconsistencies between these elements. We need to analyze where we are and then work out where to go next.

Why Organizational Transformation? Transformations occur in response to or in anticipation of major changes in the organization's environment or technology. Changes often are associated with significant alterations in the firm's business strategy, which, in turn, may require modifying corporate culture as well as internal structures and processes to support the new direction. Such fundamental change entails a new paradigm for organizing and managing organizations. It involves qualitatively different ways of perceiving, thinking, and behaving in organizations.

Contd. Movement toward this new way of operating requires top managers to take an active leadership role. The change process is characterized by considerable innovation and learning and continues almost indefinitely as organization members discover new ways of improving the organization and adapting it to changing conditions. Organization transformation is a recent advance in organization development, and there is some confusion about its meaning and definition.

Pillars of Transformation Need to Transform Management To Change Attitude Resource Base Technology Support Structural Support Socialization Personnel Sustainable Transformation

Types of Change Incremental change Revolutionary/ Transformational change Another View: The ‘good to great’ transformation Turnaround

Incremental change Change that occurs bit by bit May not have far-reaching effects on the organization Good for organizations that do not require ‘shock therapy’ Does not require fundamental change of prevailing systems and structural arrangement

Transformational change Is accompanied by a fundamental shift in consciousness, values, or perceptions. Entails a profound transmutation of the prevailing vision of reality. This shift in consciousness alters the basic ways an organization or individual responds to the environment. A transformation occurs when new meaning is successfully established in relation to the organization’s environment.

Characteristics of Transformational change Change is triggered by environmental and internal disruptions It is systemic and revolutionary It demands a new organizing Paradigm It is driven by senior executives and line management It involves continuous learning

Stages of Organizational Transformation Unconscious Stage Awakening Stage Reordering Stage Translation Stage Commitment Stage Embodiment Stage Integration Stage

Unconscious Stage A passive time within which the organization builds a readiness for change Characterized by a sweeping need for radical change and a realization that something is wrong Certain clues in the informal networks (e.g. unconnected bits of random information, sporadic symptoms, and tentative new ideas) indicate that an organization is experiencing the unconscious stage Once new information becomes part of the organization consciousness, it becomes apparent that changes are necessary The organization begins to identify and confront, the existing situation

Awakening Stage Suddenly, the organization awakens to possibilities and problems present in the current situation The unconnected pieces of information from the unconscious stage are synthesized into a message of needed change The need for transformative change may be identified by several different sources

Reordering Stage Reordering is a process of analyzing the existing situation and challenging underlying patterns Reordering produces creative chaos and turmoil necessary for a full grasp of the issues and implications This process affects the stability of the organization and the equilibrium of individuals. Evidence of instability exists in undefined roles, increased workloads, and unfocused directions. Finally the employee accepts that what ‘was’ no longer ‘is’

Translation Stage Translation is the process of formulating a vision from the integration of information, metaphorical images, personal visions, and feelings collected in the unconscious, awakening, and reordering stages. The vision evolves into a clear image of what the organization wants to achieve, which then organizes and instructs every step toward the desired future. Specific long range goals and strategies for implementation emerge from the vision, enabling individuals to move forward in a concerted effort. This stage establishes a cohesive, focused direction that will provide the foundation for total commitment of the organization.

Commitment Stage The organization takes responsibility for implementation of the new vision For both the organization and individuals, the commitment stage is a time of being torn between the potential of the new direction and the security of the old. The tension between these two forces can cause an imbalance that creates internal disequilibrium and external strife. Moving forward and yet holding back, the individual experiences attachments to the past and fear of the unknown future. If the organization does not prepare the individual to handle these stresses, the transition may revert to earlier stages, stagnate, or die.

Embodiment Stage The organization has reached the point where its task is to bring the transformed vision into its day-to-day operations. The challenge is to manage the interaction of three elements: Consciousness shifts that provide the new paradigm for the organization Structural changes that provide a framework for the transformed organization Behavioral changes that bring employee actions into alignment with the transformed structure.

Contd. Embodiment is a four stage process: Identification Experimentation Practice Internalization

Integration Stage Integration is the stage in a transition where the organization experiences a solid foundation for peak performance The necessary changes, both structural and behavioral, are instituted and operationalized. Consciousness has been altered so the organization and individual are functioning from a new paradigm. People feel that the changes are real and are going to stay. The anticipated future state is now in place and celebrations are instituted Through celebrations and rituals, the community is solidified and the emotional, psychological, and physical ups and downs of the change process are healed.

Disruptions that trigger change Industry discontinuities- sharp changes in legal, political, economic, and technological conditions that shift the basis for competition within industries Product life cycle shifts- changes in product life cycle that require different business strategies Internal company dynamics- changes in size, corporate portfolio strategy, executive turnover, and the like. These disruptions severely jolt organizations and push them to alter business strategy and, in turn, their mission, values, structure, systems, and procedures.

Hindrances to Change Organizational culture Organizational design Lack of organization learning Poor knowledge and information management

Culture Change Organization culture is the pattern of basic assumptions, values, norms, and artifacts shared by organization members. These shared meanings help members make sense out of everyday life in the organization. The meanings signal how work is to be done and evaluated, and how employees are to relate to each other and to significant others, such as customers, suppliers, and government agencies.

Levels of Organizational Culture Organization culture includes four major elements existing at different levels of awareness: 1. Artifacts/ symbols 2. Norms 3. Values 4. Basic Assumptions

Leadership Roles in Organizational Transformation Envisioning Direction setting Empowering individuals Enabling/facilitating Leading process redesign Triggering performance improvement

Keys to Transformation… in conclusion Leading a business from a historical to a future source of sustainable advantage. Combining tangible as well as intangible resource support Using existing resource base to create new sustainable resource bases Transforming from current structural arrangements to a much more sustainable one Moving steadily away from a system of waste

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