Food for thought
Corporate revitalization often includes shifts in
strategy or process or structure, but
revitalization means a good deal more—it
means a permanent rekindling of individual
creativity and responsibility, a lasting
transformation of the company’s internal and
external relationships, an honest-to-God change
in human behavior on the job…
Where We Are
Introduction
& overview
Strategies of change
& conclusion
Leadership
& Initiation of change
EIS Simulation:
The change process
Organization level:
Culture & structure
Individual level:
Change agent
Interpersonal level:
Social capital
Session 5
Managing Change at the
Organizational Level
Topics for Today
• Theme 1: Organizational change through empowerment
– Strategic consideration: top-down vs. bottom-up
– Empowerment as a strategy
• Theme 2: Organizational change through structural
design
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The role of structural designs in organizational change
Case study: Appex Corporation
Debate: structural change vs. cultural change
Summary and takeaways
Theme 1: Organizational change through
the management of culture
• The need to get people involved
– The key is to change the mental model
• Organizational culture
– values and norms that are shared by people/groups
that control the way they act internally and
externally.
– Values = beliefs about goals and appropriate
standards for achievement (behaviors)
– Norms = expectations about behavior in specific
situations and toward one another.
Organizational Culture
• Espoused Values
– individual values (CEO, managers) that the group
adopts through validation (cognitive transformation
to shared value)
– conscious and explicit - serve a normative or moral
function to guide members in certain situations and
in socializing members.
– Strategies - goals - philosophies
Organizational Culture
• Basic underlying assumptions:
– a solution to a problem that works repeatedly &
becomes taken for granted
– cannot be confronted or debated and are difficult
(if not impossible) to change.
– can only be changed through re-examination and
re-evaluation of the cognitive structure.
– individuals will distort or deny rather than adopt thus culture at this level is a defense mechanism
– so…major change means managing at this level.
Organizational Culture
– Socialization - how people learn the culture
– Consists of stories, myths, legends, etc.
• influence of the founder
• organizational structure
• composition of TMT
– Adaptive cultures - encourage and reward
initiative/innovativeness - easiest to change…
– Inert cultures - cautious and conservative, does not
value initiative & may discourage
Organizational Culture
• Strong Adaptive Cultures characterized by:
– Bias for action - autonomy, risk-taking,
entrepreneurship
– Coherent mission - sticks to knitting, close to
customers
– Structured for flexibility
Changing organizational culture
(Pascale et al. 2000)
• Incorporating employees in the process
– Not communicating, motivating
– It is resocialization—changes the way people think
• Leading from a different place
– Out of the comfort zone
– Generate a sense of urgency, maintain healthy levels of stress,
resist coming to the rescue with ready answers.
• Instilling mental disciplines
– Let employees see the larger picture
– Manage from the future
– Cerate relentless discomfort with the status quo.
Empowerment
(Quinn and Spreitzer 1997)
• Empowered people have a sense of
– Self-determination
– Meaning
– Competence
– Impact
“Because empowerment includes risk-taking, it opens the
possibility of making mistakes. If those mistakes were
punished, then individuals became disenchanted with their new
ways of thinking, and regressed to past behaviors. If they
received no support or reinforcement, then the cycle of
empowerment was halted and individuals actually felt more
disempowered than before.”
Quinn and Spreitzer (1997, p. 45)
Are you empowered?
(Quinn and Spreitzer 1997)
• To what extent do I have a sense of meaning and task
alignment, and what can I do to increase it?
• To what extent do I have a sense of impact, influence,
and power, and what can I do to increase it?
• To what extent do I have a sense of competence and
confidence to execute my work, and what can I do to
increase it?
• To what extent do I have a sense of self-determination
and choice, and what can I do to increase it?
Debate:
Change from top-down or bottom-up?
Theme 2: Organizational change through
structural design
• Strategic design and organizational control
• The role of structure in organizational change
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Structure
Structure
Structure
Structure
and organizational alignment
 power, resources
 vested interests
generates stability, predictability
• Types of organizational structures
Organizational Structure
• Functional structure - groups people on the
basis of common expertise & resources
• Pro:
learning (transfer of knowledge within function)
monitoring is easier
processes become more efficient
greater managerial control
• Con:
control becomes a problem as company grows
communication and coordination (between functions)
measurement (contribution of function)
loss of strategic focus by TMT
Multi-Divisional Structure
– Product lines or business unit is self-contained corporate HQ established for support & control
• Divisional unit = operating authority
• HQ = strategic authority
– Adv:
Financial control - easier to monitor
Strategic control - time for TMT to focus on strategy
Growth - add businesses or products
Internal efficiency - allows clearer variance
identification
– Disadvantages:
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Division/Corporate relationship
Interdivisional competition - resources, parent attention
Short-term focus
Bureaucratic costs
Multi-Divisional Structures
Matrix Organization
– Based on two forms of horizontal differentiation:
functional and project/product
– Advantages:
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Employees tend to be highly qualified, professional, &
perform best in autonomous, flexible working conditions
Employees can be moved from project to project
leaves TMT to focus on strategy
– Disadvantages:
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high bureaucratic costs
constant movement of employees means $
two boss role can create conflict
Matrix Structure
Team Structure
• Many companies use permanent crossfunctional teams
• formed at the beginning of product development process and
continued throughout implementation
• speeds innovation and customer responsiveness
• stronger in highly dynamic industries
Team Structure
Network Organizations
• Core group of experts manages the outsourcing
process closely
• This forms a hub & spoke type of organization
consisting of many contracts
• Could create a control problem with contract
organizations
• Example: Nike
Network Structure
.
Case study: Appex Corporation
Background
• Shikhar Ghosh – expertise in structural design
• Appex before Shikhar:
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Small size: 20 employees, $2mil.
Entrepreneurial
Technology-driven, project-based
Loosely structured
Organizational culture: informal
• Challenges:
– Growing pains: consider Greiner’s 5 stages of growth
– From innovation to sustainable growth
The Five Phases of Growth
Larry Greiner
The search for structural fit
• Circular structure
– What kinds of problems does it run into?
• Horizontal structure
– Why does it not work for Appex at this stage?
• Hierarchical, functional structure
– Does it address the challenges? Why?
• Divisional structure
– What is the rationale? Does it work?
Questions for discussion
• Is “structure and control” the most important aspect
for organizational change at this stage of Appex’s
development?
• How do you evaluate the effectiveness of the different
structures adopted at Appex over time?
• Would you do anything differently?
• What is the relationship between organizational
structure and culture?
• The lessons from Citibank practice in Taiwan
Strategic choice in knowledge management
(Hansen, Nohria, and Tierney 1999)
• Two strategies: codification vs. personalization
– Examples: IBM versus 3M
– Codification: Provide high-quality, reliable and fast information
implementation.
– Personalization: Provide creative, analytically rigorous advice
on high-level strategic problems.
• The trade-off between professionalization and
bureaucratization
• Implications:
– structure vs. culture as control device
– Strategic design in culture, strategy, HRM
Summary and takeaways
• Strategic choices for change: Top-down versus bottomup
– Leadership and the initiation of change
– Empowerment: Organizational changes need bottom-up
processes that involve employees and change their mindsets.
• Strategic choices for change: Cultural vs. structural
changes
– Complementality between the two
– The need for a systematic change program
– What is your priority?