Chapter 14
Organizational
Change and
Development
Michael A. Hitt
C. Chet Miller
Adrienne Colella
Slides by Ralph R. Braithwaite
14-1
The Evolution of Starbucks
As Starbucks grew, they realized that the
informal techniques were not sufficient and
needed to have a more formalized process in
place. Why were these changes difficult for the Howard Schultz
organization?
Starbucks is faced with new challenges today. It
has dominated the marketplace. Have they
grown too fast? Will changes in the marketplace
Dave Olsen
require a different approach?
What do you think the future will hold for them?
Exploring Behavior in Action
Dawn Pinaud
14-2
Organizational Change and
Development
Polaroid introduced instant photography to the market.
They were one of the top 50 companies in the U.S. But
they, like many others, were slow to change.
What would you have done differently if you were a senior
manager at Polaroid?
Can you think of any other companies that were too slow
to change and suffered the consequences?
Why is change so difficult to manage?
14-3
Knowledge Objectives
1. Describe two major internal pressures for change.
2. Identify and explain six major external pressures for
change
3. Describe the three-phase model of planned change.
4. Discuss important tactical choices involving the speed
and style of a change effort.
5. Explain the four general causes of resistance to
change and the tactics that can be used to address
each cause.
6. Discuss the role of the DADA syndrome in
organizational change.
7. Describe the basic organization development (OD)
model and discuss OD interventions, including
relationship techniques and structural techniques.
14-4
Pressures for Change
Aspirations
Life-Cycle
Forces
Growing
International
Interdependence
Technological
Advances
Introduction
or Removal of
Government
Regulations
Pressure for
Change
Changes in
Demographics
Changes in
Societal Values
Shifting
Political
Dynamics
Adapted from Exhibit 14-1: Internal and External Pressures for Organizational Change
14-5
Aspiration-Performance
Discrepancies
• Gaps between what an individual, unit, or
organization wants to achieve and what it is
actually achieving.
• Three important factors in the role of
aspirations
• Past aspirations
• Past performance
• Comparison with others
14-6
Life-Cycle Forces
Natural and predictable pressures that build as an
organization grows and that must be addressed if
the organization is to continue to grow.
14-7
Integrative Life-Cycle Model
Entrepreneurial
Stage
Need for
additional
people
Collectivity
Stage
Need for stability
and structure
Formalization and
Control Stage
Need for
balance
Elaboration
Stage
Adapted from Exhibit 14-2: Integrative Life-Cycle Model
14-8
External Pressures for Change
Technological
advances
Shifting political
dynamics
Introduction and
removal of government
regulations
Changes in
demographics
Changes in
societal values
Growing international
interdependence
14-9
Managerial
Advice
Companies’ Responses
to Pressures for “Green”
Policies and Practices
Are companies becoming more “green” for reasons other
than the “bottom-line”? Give some examples.
What is your organization doing to become more “green”?
What are you doing personally?
Should becoming “green” be a choice or is legislation
needed to make it happen?
14-10
Planned Change
A process involving deliberate efforts to move an
organization or a unit from its current
undesirable state to a new, more desirable state
Awakening
Energizing
Unfreezing
Mobilizing
Envisioning
Moving
Reinforcing
Enabling
Refreezing
14-11
Process of Planned Change
Kurt Lewin
Unfreezing
Moving
Refreezing
• Provide rationale
• Provide information
• Implement new
for change
• Create minor
levels of
guilt/anxiety about
not changing
• Create sense of
psychological
safety concerning
change
that suspects
proposed changes
• Bring about actual
shifts in behavior
evaluation systems
• Create minor levels
of guilt/anxiety about
not changing
• Implement new
hiring and promotion
systems
Adapted from Exhibit 14-3: Process of Planned Change
14-12
Coca-Cola Is Finding a New Fizz
Coca-Cola is changing its culture, and
also adapting its product line to better
satisfy the demand of customers.
What are your thoughts about the
Neville Isdell steps they are taking regarding
Sandy Douglas
these changes?
Do you think the new innovations and changes
will have a positive or a negative impact on
their existing brands? Why?
What other changes would you suggest to help
them remain competitive?
Experiencing
Strategic OB
14-13
Sources of Failure
1. Managers and associates should not expect all
change activities to occur sequentially.
2. A team of change leaders, rather than a single
individual, should guide an organization through a
major change effort.
In addition to size, four factors to consider
when forming change teams:
John Kotter
Position Power
Informal Credibility
Expertise
Proven Leadership
14-14
Speed of Change
Urgency
Degree of support
Criteria to
Consider
Amount and complexity of change
Competitive environment
Knowledge and skills available
Financial and other resources
14-15
Style of Change
Non-participatory – top down, leaders design the
change and plan its implementation
Participatory – change leaders seek the ideas and
advice of associates and then use many of those
ideas. Criteria for evaluating the degree to which
the participatory style should be used:
Urgency
Degree of
Support
Referent and
Expert Power
of Leaders
14-16
Resistance to Change
Effort to block new
ways of doing things
Four Factors
Lack of
understanding
Self-interest
Different
assessments
Low tolerance
for change
14-17
British Airways: The Yin and
Yang of Organizational Change
Do you think there was any incentive for British
Airways to change prior to deregulation?
Why do you think the changes were effective?
Given the problems faced by all the major
airlines at the time, why do you think there was
still so much resistance to the changes?
What other changes would you recommend at
Willie Walsh
this time?
Experiencing
Strategic OB
14-18
The DADA syndrome
Denial – ignore possible or current change
Anger – individuals facing unwanted change
become angry about the change
Depression – individuals experience
emotional lows
Acceptance – individuals embrace the
reality of the situation and make the best of it
14-19
Organization Development (OD)
A planned, organization-wide, continuous process
designed to improve communication, problem
solving, and learning through the application of
behavioral science knowledge
• Roots in humanistic psychology
• Grounded in values of individual empowerment and
•
interpersonal cooperation
Fully consistent with the high-involvement
management approach
14-20
Basic Organization Development
Model
Diagnosis of
Situation
Feedback
Introduction of
interventions
Progress
Monitoring
Adapted from Exhibit 14-4: Basic Organization Development Model
14-21
Organization Development
Interventions
Organization
Development
Relationship Techniques
Structural Techniques
T-group Training
Team Building
Survey Feedback
Job Redesign
Management by Objectives
Supplemental Organizational
Processes
Adapted from Exhibit 14-5: Organization Development Interventions
14-22
Relationship Techniques
T-group Training
Team Building
Survey Feedback
14-23
Team Building Tips
Get the right people together for a large block of
uninterrupted time to work on high-priority
problems or opportunities that they have
identified and have them work in ways that are
structured to enhance the likelihood of realistic
solutions and action plans, which are then
implemented enthusiastically and followed up to
assess actual versus expected results.
14-24
Job Redesign
Structural
Techniques
Management by
Objectives (MBO)
Supplemental
Organizational
Processes
14-25
Organizational Learning
Exploitative
Learning
Exploratory
Learning
14-26
Organization Development
Across Cultures
Flexibility
Ethnocentric
Attitude and
Stereotyping
Knowledge of
Specific Cultures
Interpersonal
Sensitivity
14-27
The Strategic Lens
1. Why do organizations need to make changes on a
regular basis? What are the major causes of these
changes?
2. Why is it so difficult for people to change their
behavior, even when they know it is important to do
so?
3. If you were in a managerial position and believed that a
major change in your unit’s structure was needed, what
actions would you take to ensure that the change was
made effectively?
14-28
Questions
14-29