1. What Changes in Organizations
Chapter 4
What Changes in Organizations
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Scale of Change First-order change: Incremental
2nd order
Between 1st & 2nd Order Change
Implications for Change Managers
Types of Change:
Downsizing
Technological
Mergers
Key Change Challenges
First-order change:
Incremental
Maintains and develops the organization
E.g. continuous and smaller changes to the structure of an organisation
Change process, system or structure, but the strategy, vision, goals remain the same
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3. Scale of Change Second-order change: Discontinuous Transformational
1st order
2nd order
Between 1st & 2nd Order Change
Implications for Change Managers
Types of Change:
Downsizing
Technological
Mergers
Key Change Challenges
Second-order change:
Discontinuous
Transformational
Fundamentally changes the way an organization functions
change the strategy, the vision, the “core” of the organization
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4. Types of Changes 1st order (incremental) 2nd order (discontinuous)
Anticipatory
Improvement
Reorientation
Reactive
Adaptation
Re-creation

5. 1st Order Change - Individual Initiatives
Individuals (often front line workers) are the ones most able to identify relevant and innovative organizational change at a local level
Two conditions must be met
Some individuals must take initiative
Organization must provide space for indiv. Initiatives

6. 1st Order Change – Development of Local Routines
When local departments can interpret how a process should be implemented, given centralized “guidelines”
Process evolves over time and then may be centralized

7. 2nd Order Change – Why?

8. 2nd order change
Eight commonly occurring recommendations for major org. change:
Delayering
Networks and Alliances (strat. collab.)
Outsourcing
Disaggregating
Empowerment
Flexible Work groups
Short term Staffing
Reduction of external or internal boundaries

9. 2nd Order Change - Rationale

10. 2nd Order Change - Rationale

11. 2nd order change - Rationale

12. 2nd Order Change – Transformation Types

13. Between 1st & 2nd Order Change
Scale of Change:
1st order
2nd order
Between 1st & 2nd Order Change
Implications for Change Managers
Types of Change:
Downsizing
Technological
Mergers
Key Change Challenges
Mid-range changes
Overcomes inertia but is not revolutionary
Avoids the alarming implications of large scale change
Punctuated equilibrium
Long periods of stability followed by short bursts of change and instability
Robust transformation
Considers environmental conditions as being temporary and requiring robust responses including the enactment of new capabilities.
Change is not always linear!!
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14. Implications for change Managers
Type of change requires a specific type of manager
Change Manager as…
Implication
Interpreter
How is the change viewed by those it affects
Navigator
Discontinuous change may be complex, but can be achieved with many small changes
Nurturer
Change may have unintended effects, and people’s reactions can only be shaped, not controlled
Coach
Inertia may need to be overcome
Director
People need directions for stability as well

15. Implications for Change Managers
Scale of Change:
1st order
2nd order
Between 1st & 2nd Order Change
Implications for Change Managers
Types of Change:
Downsizing
Technological
Mergers
Key Change Challenges
Implication for Change Manager
Image of Managing Change
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.
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
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.
Navigator: when implementing multiple changes, there is likely to be contact with different groups that will require negotiation and navigation through a range of issues—not all of which they will be able to control.
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.
There are a number of inertial forces that act as a drag on individuals and organizations in adopting adaptive, first-order change.
Coach: the managers of change are likely to assume that, as long as people have been well “coached” in a variety of organizational skills, then, when organizational “problems” are triggered, they will take the initiative and make appropriate adaptive changes to alter organizational practices and routines.
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.
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.
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16. Implications for Change Managers
Scale of Change:
1st order
2nd order
Between 1st & 2nd Order Change
Implications for Change Managers
Types of Change:
Downsizing
Technological
Mergers
Key Change Challenges
Implication for Change Manager
Image of Managing Change
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
There is often an implicit assumption that incremental, adaptive changes are less risky than large, second-order transformational changes.
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.
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17. Approaches to downsizing:
Types of Change
Scale of Change:
1st order
2nd order
Between 1st & 2nd Order Change
Implications for Change Managers
Types of Change:
Downsizing
Technological
Mergers
Key Change Challenges
DOWNSIZING
Approaches to downsizing:
Retrenchment (Centralization)
Downscaling (Reduction)
Downscoping (Divestment)
Does not necessarily lead to increased productivity
Can be an excessively costly exercise
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18. Challenges to Downsizing
Employee Retention
Loss of Core Competencies
Minimizing Political Behaviour
Survivor Syndrome
Communication
About the situation faced
Due Diligence
Was it necessary?
Cultural Adjustment
Choice of Technique

19. Types of Change TECHNOLOGICAL CHANGE
Scale of Change:
1st order
2nd order
Between 1st & 2nd Order Change
Implications for Change Managers
Types of Change:
Downsizing
Technological
Mergers
Key Change Challenges
TECHNOLOGICAL CHANGE
There are a variety of new technologies being used, for example:
Customer relationship management (CRM) systems
Enterprise resource planning (ERP)
Wireless technology
Business process reengineering (BPR)
Six Sigma
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20. Challenges to Technological Change
Goal synthesis.
Choice of technology
political barriers (loss of control)
The IT team working with the board
Communication
Time frame and disruption
Contingency planning

21. Enable organizational growth at an accelerated rate
Types of Change
Scale of Change:
1st order
2nd order
Between 1st & 2nd Order Change
Implications for Change Managers
Types of Change:
Downsizing
Technological
Mergers
Key Change Challenges
MERGERS AND ACQUISITIONS
Enable organizational growth at an accelerated rate
Types of mergers and acquisitions:
Excessive capacity
Neighboring market expansion
New product or market investment
Research and development
Leveraging to create industries
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22. Challenges to Mergers and Acqusitions
Mergers & Acquisitions
Cost savings are Overvalued initially
Cultural adjustment when 2 cultures merge
Balancing change and continuity
Due diligence on values
retention of key employees
Contingency planning
Power structure.
Communication
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