Chapter 2

Organization Renewal:
The Challenge of Change

Chapter 2
Slide 1
 Learning Objectives
1. Recognize factors contributing to
change.
2. Identify ways organizations use
renewing processes.
3. Determine ways to cope with change.
4. Understand and apply sociotechnical-
systems approach.
Chapter 2
Slide 2
 Figure 2.1
Stage 1 of ODs 5 Stages

Chapter 2
Slide 3
 1. Pressure for Change
Market. Downsizing.
Product. Reengineering.
Competition. Flattening
structures.
Going global.
 2. Renewal of Organizations
Make adaptive changes to environment.
The only constant is change.
Focus on:
Changing systems stressing situational
nature of problem and their System-wide
impact.

Chapter 2
Slide 5
 Organization Renewal -
Adapting to Change
Organizational renewal important to
survival.
Defined as:
An ongoing process.
Builds innovation and adaptation.

Chapter 2
Slide 6
 Approaches to Change
Two dimensions:
Adaptive orientation.
Environmental stability.
 3. 4 Ways for Organization to
Adapt to Change:
Sluggish Thermostat Management.
Satisficing Management.
Reactive Management.
Renewing/Transformation Management.
 Figure 2.2
Model of Adaptive Orientation
 Sluggish-Thermostat
Management
Stable environment, low adaptation.
Management style based on low risk.
Organizations using this style:
Have very stable goals.
Highly centralized structure
Tend to have more managerial levels
Higher ratio of superior to subordinate
Value tradition keep doing things as they used to
Value seniority more than performance n practice formal control system
E.g Ford Motor.
Low risk style of management may lead to entropy. Victim of own success
, slow change not because of failure but due to sussess.

Chapter 2
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 Satisficing Management
Stable environment, high adaptation.
Adequate and average.
Planning and decision-making concentrated at top. High clarity of
procedure
Stable env more level of mgt coordination by formal committees
Tend to go for strategy of good enough due to low level for change.
However without change they would gradually decline in performance.

Chapter 2
Slide 11
 Reactive Management
Hyperturbulent environment, low adaptation.
Reacting after conditions change.
Short-term, crisis type of adaptation.
Waiting until serious problem emerge than only taking corrective action
Usually involves:
Replacing key people.
Hasty reorganization.

Chapter 2
Slide 12
 Renewing/Transformation
Management
Hyperturbulent environment, high adaptation.
Deal with future conditions before they occur.
Faster at developing new ideas.
More participative.
Today, organization need to go for this
approach for survival

E.g GE General Electric, IBM, 3M

 4. Systems Approach
Breaks company into key processes.
Creates teams from different
departments to run them.

Chapter 2
Slide 14
 Organization as a System
System is set of interrelated parts.
Unified by design to achieve purpose or
goal.
Being practiced by Hp

Chapter 2
Slide 15
 Basic Qualities of Systems
part 2 of 2

Ingredients of process more vital than

elements.
Organization more important than
elements.

Chapter 2
Slide 16
 Figure 2.3
Organization as Open System

Chapter 2
Slide 17
 Open Systems
In continual interaction with
environment.
Continually receives feedback from
environment.

Chapter 2
Slide 18
5. The Sociotechnical System
Coordinated human and technical
activities.
Consists of:
Goals and values.
Technical subsystem.
Structural subsystem.
Psychosocial subsystem (culture).
Managerial subsystem.

Chapter 2
Slide 19
 Figure 2.4
The Sociotechnical System

Chapter 2
Slide 20
 High Performance Systems
Occur by design, not by chance.
Key variables are:
Business situation.
Strategy.
Design elements.
Culture.
Results.

Chapter 2
Slide 21
 Contingency Approach
Considers organization and
environment.
Identifies if-then relationships.
Suggests change in directions.

Chapter 2
Slide 22
 Future Shock and Change
Too much change in too short a time.
Inability to adapt to accelerating
change.
Management reaction to change
strained.
Managers must be adaptable and
flexible.
Chapter 2
Slide 23
 Organization Transformation
(OT) and Organization
Development
OT and OD are approaches to
managing change.
Both are major ways of managing
change.

Chapter 2
Slide 24
 Organization Transformation
OT changes organizations form or
appearance.
OT is a revolution.
Transforms framework of organization.
Unplanned changes in response to
pressures.
Change occurs in short time frame.

Chapter 2
Slide 25
 Organization Development
OD like an evolution.
Planned change on large scale.
Longer time frame than OT.
Gradual implementation.
Modifies total organization or major
parts.

Chapter 2
Slide 26
 What OD Focuses On
Individual effectiveness.
Team effectiveness.
Organization effectiveness.

Chapter 2
Slide 27
 Focus on Individual
Effectiveness
The goals are to improve:
Managerial skills.
Technical skills.
Interpersonal competence.

Chapter 2
Slide 28
Focus on Team Effectiveness
(part 1 of 2)

Emphasis on:
Improving problem-solving.
Working through conflicts.
Team effectiveness.

Chapter 2
Slide 29
Focus on Team Effectiveness
(part 2 of 2)

Team activities are:

Task activitieswhat the team does.
Team processhow the team works.
Process observations examine:
The way the group functions.
Leadership, decision making,
communication.

Chapter 2
Slide 30
 Focus on Organization
Effectiveness
Focus on total organization system.
Improve effectiveness by changes in:
Structure.
Technology.
Management.

Chapter 2
Slide 31
 OD Application
Googles Culture
Operates under freewheeling
managerial style.
Challenge to develop further creative
culture.
Co-managed by:
CEO Eric Schmidt.
Founders, Larry Page and Sergey Brin.
Chapter 2
Slide 32
 World wide workforce of over 20,000.
Uses fluid work groups.
Engineers move to projects that interest
them.
Engineers work on own projects 20
percent of time.
Outward impression is disorganized.
But Google maintains focus and strategy.

Chapter 2
Slide 33
 OD Application
Apple and Renewal
Mission to provide more choices, better
products.
Result is innovative, profitable
company.
One of most innovative companies
On Fortune 500 list of return to
shareholders.
Chapter 2
Slide 34
 Success attributed to culture.
Defined primarily by co-founder Steven
Jobs.
Jobs perfectionist approach caused
internal problems.
Jobs management style:
Tends toward throwing tantrums.
Humiliating employees who disagree.

Chapter 2
Slide 35
 Key Words and Concepts
Client System.
Organization employing practitioner.
Assist them in planning change.
Closed systems.
Self-contained.
Isolated from environment.
Content.
Task of the group.
Chapter 2
Slide 36
 Contingency approach.
Attempt to determine proper management
technique.
Dynamic equilibrium.
Steady state.
Reacting with environment.
Entropy.
Movement toward disorder.
Eventual termination.
Feedback.
Results and reaction from behavior.
Chapter 2
Slide 37
 Future shock.
Inability to cope with rapid change.
Horizontal corporation.
Flattening hierarchical organizational charts.
Reduction in layers of management.
Hyperturbulent environment.
Rapid change.
Open system.
Interrelated and acts with environment.

Chapter 2
Slide 38
 Organization renewal.
Ongoing process of building innovation into
organization.
Organization transformation (OT).
Coping with unplanned change.
Changes organization form (revolution).
Participant-observer.
Actively participate while being aware of
group process.

Chapter 2
Slide 39
 Process observation.
Technique used in examining groups.
Reactive management.
Waits until something is problem before
reacting.
Renewing/transformational
management.
Plans for change.
Makes contingency plans.

Chapter 2
Slide 40
 Satisficing management.
Does only what is necessary to get by.
Sluggish management.
Based on low risk and formalized
procedures.
Sociotechnical System.
Open system of coordinated human and
technical activities.
Consists of five major subsystems.

Chapter 2
Slide 41
 Stable environment.
Unchanging basic products and services.
Static level of competition.
Slow, steady rate of growth.
System.
Set of interrelated elements.
Unified to achieve a goal or purpose.

Chapter 2
Slide 42
 Systems approach.
Concerned with relationships among
departments and
Interdependencies between elements and
external environment.
Task activities.
What the group does.
Team process.
How group works.
Relationships among team members.
Chapter 2
Slide 43
TQ

Chapter 2
Slide 44