Food for thought

Corporate revitalization often includes shifts in

strategy or process or structure, but
revitalization means a good deal moreit
means a permanent rekindling of individual
creativity and responsibility, a lasting
transformation of the companys 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

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
somajor 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 resocializationchanges 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

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:

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:

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:

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:

Small size: 20 employees, $2mil.

Entrepreneurial
Technology-driven, project-based
Loosely structured
Organizational culture: informal

Challenges:
Growing pains: consider Greiners 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 Appexs
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?