Chapter 5 Diagnosis for Change McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Diagnostic Tools Diagnostic Tools Images of Managing Change Advantages of diagnostic tools Diagnostic Models: Organization Components Readiness for Change The image of the change manager has an impact on the types of tools that may be used. The different images highlight the range of reasons why tools like these may be utilized – they illustrate the numerous ways change can be interpreted. 5-2

Images of Managing Change Diagnostic Tools Images of Managing Change Advantages of diagnostic tools Diagnostic Models: Organization Components Readiness for 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, e.g., 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. 5-3

Advantages of Diagnostic Tools Images of Managing Change Advantages of diagnostic tools Diagnostic Models: Organization Components Readiness for Change Simplify a complex situation. Identify priorities for attention. Highlight interconnectedness of various organizational properties (e.g., strategy and structure). Provide a common “language” with which to discuss organizational characteristics. Provide a guide to the sequence of actions to take in a change situation. 5-4

Diagnostic Models: Organization Seven Models Six-box 7-S Star Congruence Burke-Litwin Four-Frame Diagnosis by image 5-5

Diagnostic Models: Organization 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.

Diagnostic Models: Organization 7-S framework: 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.

Diagnostic Models: Organization 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.

Diagnostic Models: Organization Star model effects of misalignment

Diagnostic Models: Organization Congruence model: The organization is broken down into four components – task, individuals, formal organizational arrangements and informal organisation. This is influenced by the context where the strategy is formulated and the output is then the performance of the organization. 5-10

Diagnostic Models: Organization Burke-Litwin This model identifies the transformational – external environment, mission and strategy, leadership and organizational culture - and transactional sources of change.

Diagnostic Models: Organization Four frames to conceptualize an organization Structural – formal design. Hierarchy, process, systems, etc human resource – attention is on the relationship btwn org and its members. Political – participants interact in pursuit of a range of objectives. Some are in common, some differ. Symbolic – culture, beliefs, values, rituals, meanings

Diagnostic Models: Organization Diagnosis by image: This technique allows organizational members to use images to describe the organizations and this can be used as a basis for discussion. First: describe the organization Next: keep adding more and more detail

Diagnostic Models: Components Diagnostic Tools Images of Managing Change Advantages of diagnostic tools Diagnostic Models: Organization Components Readiness for Change PESTEL Framework: This analyses the external environment in terms of six factors – Political, Economic, Social, Technological, Environmental and Legal. 5-14

Diagnostic Models: Components Scenario analysis: Creating stories of possible future scenarios that are considered to be vital to the future of the organization “Flight simulator” Brainstorm all important environmental factors Out of the factors, everybody identify “key drivers” of performance Aggregate responses, and rank the key drivers Using the key drivers, construct 3 scenarios of what will happen to the key drivers over time Most likely Pessimistic Optimistic

Diagnostic Models: Components Gap analysis This is a tool used for reviewing the organization’s position based on where they are and where they want to get to. Where are we now? Where do we want to get to? How can we get there? High Consensus? Either close the gap, or wait for a competitor to the high concesus view Low consensus? Pay more attention to the objectives of the org

Diagnostic Models: Components 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.

Boundariless Organization Speed, flexibility, and integration are “new success factors”, which are achieved by reducing boundaries: Vertical Horizontal External geographic

Diagnostic Models: Components Diagnostic Tools Images of Managing Change Advantages of diagnostic tools Diagnostic Models: Organization Components Readiness for Change 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. 5-19

Readiness for Change Diagnostic Tools Images of Managing Change Advantages of diagnostic tools Diagnostic Models: Organization Components Readiness for Change Assessing the organization's readiness to change can be a mediating variable between change management strategies and the outcomes of desired strategies. A perchance 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: Questionnaires 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. Force-field analysis: This identifies factors that are driving forces for change as well as restraining forces. 5-20

Looks at factors that can hinder or assist the change Force Field Analysis Looks at factors that can hinder or assist the change 5-21

Focuses on the position of key stakeholders Stakeholder Analysis Focuses on the position of key stakeholders Who has power Who will resist the most How can support be gathered How can resistance be reduce 5-22

Exercise – Boeing Case You will be given a model, for either conceptualizing the organization, or diagnosing the readiness for change Make a brief presentation on the model Apply the model to the case, making assumptions when needed How did the model give you insight, or increase your understanding of the case? In what ways would you enhance the model, to improve its suitability for the case?