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Managing
Organizational Change
Achieving Sustained Competitive Advantage
1. Adapting to change in external trends,
internal capabilities and resources
2. Effectively formulating, implementing &
evaluating strategies
Adapting to Change –
Key Strategic Management Questions
What kind of business
should we become?
 Are we in the right fields
 Are there new competitors
 What strategies should we
pursue?
 How are our customers
changing?

Contingency Approaches

Huy’s Contingency Approach categorizes change into 4
ideal types:
1.
2.
3.
4.
The commanding intervention
•
•
•
•
•
•
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Short-term and rapid
senior executives
Downsizing, outsourcing, divesting
The engineering intervention
Medium-term and relatively fast
Analysts
Changing work design and operational systems
The teaching intervention
Long-term and gradual
Consultants
Work practices and behaviours
The socializing intervention
Long-term and gradual
Participative experiential learning, self-monitoring
Democratic organizational practices
8-6
Contingency Approaches
Contingency approaches remain less common than
change management approaches. Suggested
reasons include:
•
•
•
•
•
Achieving “fit” may be difficult due to differing
perceptions of the conditions in which the fit is sought
Contingency approaches require greater analysis and
decisions by managers; the prescriptiveness of
change management models may be attractive to
managers
Contingency approaches focus on leadership style
rather than a specific set of actions
The use of different change styles at different times
may raises questions in the minds of staff as to the
credibility of senior management.
There is a question about “what” is contingent to
managing change
8-7
Why Organizations Change

External forces for change
o e.g. new technology
o e.g. geopolitical environment

Internal Forces for change
o e.g. a new CEO
o e.g. growth cycle

Forces for stability
oThink: Do we really need this change? what are the
likely returns (economic, other) of this change?
1-8
What Changes in Organizations

Common types of changes:
◦ Mergers and acquisitions
◦ Downsizing
◦ Technological changes

Proactive Vs. reactive changes

Scale of change
◦ Incremental
◦ transformational
1-9
Diagnosis for Change

Organization models to assess where changes are
needed in an organization
o
o
o
o
o
o
Strategy
Structure
Operations
Culture
Management behaviours and mindsets
Employee behaviours and mindsets
o
o
o

Communication
Reward mechanisms
Modes of interaction
Component analysis tools to assess the changes needed in
each part of the organization
◦ E.g. force-field (strategy), PESTEL (environment), cultural web
(culture)

Assessing readiness to change
1-10
Resistance to Change
1.
◦
◦
◦
◦
◦
◦
2.
◦
◦
Why do people resist to change
Experiences with past change
Discomfort with uncertainty
Lack of conviction that change is needed
Perceived negative effect on interests
Lack of clarity as to what is expected
Belief that the timing is wrong
Managing resistance
The resistance cycle
The power of resistance
1-11
Implementing Change
Implementation method is important: A
good idea for change may be badly
managed and fail.
◦
◦
How much do we involve people
When things will be done
Two main approaches:
 Organization development (OD)
Appreciative Inquiry
 Change Management
Contingency approaches
1-12
Linking Vision and Change
1.
2.
Content of meaningful visions
Process by which visions are
emerged
Three dilemmas:
1. Does vision drive change or emerge during
change?
2. Visions help or hinder change?
3. Vision belongs to organizations or to
leaders?
1-13
Sustaining Change
Actions to sustain change:
•
•
•
•
Redesign roles and reward systems
Measure progress
Celebrate
Fine-tune
1-14
the things we
need to do to
sustain change
The strategy
and skills we
use and to
communicate
change
Why we think
the organization
needs to change
How change
unfolds and
what change
looks like
How we go
about
diagnosing what
we think needs
to be changed
Images we
have of
ourselves as
managers of
change
influence
The importance
we place on the
role of vision in
change
The underlying
theory we use
to implement
change
The approach
we take to
handling
people’s
reaction to
change
1-15
MCKINSEY’S 7S FRAMEWORK
McKinsey 7-S Model
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Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
McKinsey 7-S Model
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Strategy
The Hard S’s
Structure
The hard elements are factual
Systems
and easy to identify. They can be
found in strategy statements,
Style
corporate plans, organization
Staff
charts, and other documentation
Skills
Superordinate goals
McKinsey 7-S Model
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Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
The Soft S’s
The soft elements are
difficult to describe
since they are
continuously
developing and
changing. They are
highly determined by
the people at work in
the organization.
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7-S Model – The Hard S’s
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
Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
Strategy
◦ Actions a company plans in response to or in anticipation
of changes in its external environment

Structure
◦ Basis for specialization and coordination, influenced
primarily by strategy and by organization size and
diversity

Systems
◦ Formal and informal procedures that support the strategy
and structure (Systems are more powerful than they are
given credit)
Strategy Formulation
Vision & Mission
External Opportunities & Threats
Internal Strengths & Weaknesses
Long-Term Objectives
Alternative Strategies
Strategy Selection

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
Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
Organizational Structure

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 Organization
Chart
◦ formal reporting relationships
◦ levels in hierarchy
◦ spans of control
◦ departmentalization
 Systems
to facilitate:
◦ coordination
◦ communication
◦ integration
Structural Designs

Functional Structure
◦ Can adapt functional structure
with horizontal linkages

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Divisional Structure
Geographical Structure
Matrix Structure
Horizontal Structure /
Product Line Structure
Hybrid Structure
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Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
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Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
Other Organizational Forms
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Joint Ventures
 Licensing agreements
 Strategic Alliances
 Consortia
 Virtual organizations
 Global (transnational) Work
Teams
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Virtual Teams
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Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
Virtual Teams are characterized by:

◦ Distributed locations of team members
◦ Use of information technology to accomplish
tasks
◦ Effective when:
 Communication & collaboration skills are high.
 Trust among team members is high
Organizations are increasing their use
of virtual teams
 Potential for improvement in virtual
team management is huge

Information Linkages
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Vertical Information Linkages

Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
◦ Hierarchy
◦ Rules and plans (i.e. budget)

Horizontal Information Linkages
◦ Information systems
◦ Liaison role
◦ Task force
◦ Integrator role (i.e. Project manager)
◦ Cross-functional teams
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Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
Systems – various elements
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Communications practice and
system
 Management reporting system
 Approval process
 Planning/budgeting system
 Rewards system including
appraisal
 “Rules”
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Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
From Tasks to Structure
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Tasks define jobs
 Jobs define skills required
 Skills (and other considerations)
define staff

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◦ Over time skills change as staff gains
knowledge and experience, and as
technology and corporate
infrastructure mature

Collection of jobs basis for
structure
Job design considerations
Do they have the necessary skills
and knowledge to fulfill proposed /
expanded
job requirements?
 What are the needs of the incumbent
or
the rest of your workforce in
general?

◦ Monetary
◦ Growth
◦ Socialization
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Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
THE SOFT S’s
Skills: the capabilities and competencies that exist within
the company. What it does best.
Shared values: the values and beliefs of the company.
Ultimately they guide employees towards 'valued'
behavior.
Staff: the company's people resources and how the are
developed, trained and motivated.
Style: the leadership approach of top management and
the company's overall operating approach.
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7-S Model – The Soft S’s - 1
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Style / Culture
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Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
The culture of the organization, consisting of
◦ Organizational culture: the dominant values, beliefs
and norms which develop over time and become
relatively enduring features of organization life
◦ Management style: what managers do rather than
what they say (where they spend their time and
attention, what they allow, what they reward, etc)
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Staff
Skills
Shared values /
Superordinate goals
7-S Model – The Soft S’s 2
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Style / Culture
Staff
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Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
◦ The people/human resource management – ways of
shaping basic management values, processes used
to develop managers, ways of introducing new
employees and managing careers, socialization
processes

Skills
◦ Distinctive competencies – what the company does
best, ways of developing or shifting competencies

Shared values / Superordinate goals
◦ Guiding concepts, fundamental ideas around which
a business is built – simple, usually stated at
abstract level, have great meaning inside the
organization, although outsiders may not see or
understand them
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Organizational Culture
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Culture is to organizations what
personality is to individuals
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All companies have cultures

Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
 Culture
by default
 Culture by design – thoughtful choices
based on values and core beliefs

How does a company consciously create
its culture?
From Gray & Larson “Project Management:
The Managerial Process”
Types of Organizational Cultures

Control cultures –
Drive for predictability and order
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Collaboration cultures –
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Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
Pursue close relationship with customers
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Competence cultures –
Pursue excellence and innovation

Cultivation cultures –
Pursue life enrichment for customers and employees
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Organizational Culture
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Observable Evidence:
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Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
 Symbols
 Ceremonies
 Stories
 Behaviors
 Language
 Dress

Underlying Roots:
 Values,
Assumptions, Beliefs, Attitudes, Feelings

Culture in practice

Conflict management
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Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
Relationship or interpersonal conflict
Task / process conflict
Functional vs. dysfunctional conflict
Factors: goal incompatibility, limited
resources, differences
Power – the capacity to influence behavior
◦ Positional power: rewards/consequences,
control
of resources, information and decision control
◦ Personal power: expert, referent (based on
identification and admiration)

Politics – the use of power to influence
decisions
Management vs. Leadership
Planning &
budgeting
vs.
Setting the
direction
Organizing &
staffing
vs.
Aligning people
Controlling &
problem solving
vs.
Motivating people
Management is about coping with complexity
Leadership is about coping with change
McKinsey 7-S Model
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Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
Effective
organizations
achieve a harmony
between these seven
elements; if one
element changes,
then this will affect
all the others
McKinsey 7-S Model
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Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
The 7-S Model can
be a valuable tool to
initiate change
processes and to
give them direction;
i.e. determine
current state and
ideal state of each
element, and
develop action plans
to close the gaps
McKinsey 7-S Model
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Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
In change
processes, many
organizations focus
their efforts on the
hard S’s; however,
the soft factors can
make or break a
successful change
process. All factors
must be accounted
for.
McKinsey 7-S Model
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Strategy
Structure
Systems
Style
Staff
Skills
Superordinate goals
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Interrelated
Equilibrium
Foundation of
corporate culture
Levers available to
management
Executing Change –
Seven Key Considerations
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Strategic Intent
Substance
Scale
Scope/Breadth
Speed
Sequence
Style
Style
Scope
Substance
Strategic
Intent
Speed
Scale
Sequence

Strategic Intent
Precise

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Hard S’s
Large
Organization-wide
Speed
Slow

Speed
Scope/Breadth
Isolated
Sequence
Fast
Hard – Soft
Soft – Hard
Top Down
Bottom Up
Style
Substance
Scope
Strategic
Intent
Scale
Small

Broad
Substance
Soft S’s

Style
Scale
Sequence