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Chapter 15. Organization Transformation and Strategic Change. Learning Objectives (part 1 of 2). Identify and define organization transformation in relation to change process. Understand basic strategy-culture matrix and other approaches to changing culture to fit the strategy.

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chapter 15

Chapter 15

Organization Transformation and Strategic Change

An Experiential Approach to Organization Development 7th edition

learning objectives part 1 of 2
Learning Objectives (part 1 of 2)
  • Identify and define organization transformation in relation to change process.
  • Understand basic strategy-culture matrix and other approaches to changing culture to fit the strategy.

An Experiential Approach to Organization Development 7th edition

learning objectives part 2 of 2
Learning Objectives (part 2 of 2)
  • Recognize importance of corporate culture and its relation to strategy.
  • Experience these concepts in management simulation.

An Experiential Approach to Organization Development 7th edition

the revolution at home depot that left some behind part 1 of 2
The Revolution at Home Depot that Left Some Behind (part 1 of 2)

Home Depot is number-one home-improvement retail chain in U.S.

It had unstructured and entrepreneurial culture.

Competitor Lowe’s began taking market share.

CEO Bob Nardelli was brought in to turn around dysfunctional culture.

An Experiential Approach to Organization Development 7th edition

the revolution at home depot that left some behind part 2 of 2
The Revolution at Home Depot that Left Some Behind (part 2 of 2)

Lack of support for changes from lower levels.

Changes resulted in unintended consequences.

Nardelli brought in new top management team.

Innovation and sense of ownership declined.

HR manager said it was revolution, not evolution.

An Experiential Approach to Organization Development 7th edition

strategy and transformation
Strategy and Transformation

Success can work against a company when it looses touch with customers.

Radical changes may be only choice for organization in desperate need of change.

An Experiential Approach to Organization Development 7th edition

organizational transformation part 1 of 3
Organizational Transformation(part 1 of 3)

Refers to drastic changes in how organization functions and relates to its environment.

OD strategies represent more gradual approaches to strategic change.

OT approaches are drastic and abrupt change.

An Experiential Approach to Organization Development 7th edition

organizational transformation part 2 of 3
Organizational Transformation(part 2 of 3)

OT may or may not be developmental.

OT tends to use directive, not participative, approaches to change.

Usually top-down, top-management driven.

An Experiential Approach to Organization Development 7th edition

organizational transformation part 3 of 3
Organizational Transformation(part 3 of 3)

Requires shared vision, willingness to clean house, restructure, tackle many problems.

OT tends to be shaped by use of power rather than collaborative approaches.

Due to immediate threat, this may be only way for organization to survive.

An Experiential Approach to Organization Development 7th edition

possible large scale change strategies
Possible Large-Scale Change Strategies

Large-scale change approaches are:

  • Incremental - long-term planned change.
  • Transformative - immediate, drastic change.

An Experiential Approach to Organization Development 7th edition

large scale change model
Large-Scale Change Model

Model based on 3 key dimensions:

  • Time frame of change—short or long.
  • Level of support of organizational culture.
  • Degree of discontinuity with environment.

An Experiential Approach to Organization Development 7th edition

figure 15 1 strategies for planned change
Figure 15.1Strategies for Planned Change

An Experiential Approach to Organization Development 7th edition

four change strategies part 1 of 2
Four Change Strategies (part 1 of 2)
  • Participative evolution - incremental; anticipates change; support of culture through collaborative means.
  • Charismatic transformation - radical change in short time with support of culture.

An Experiential Approach to Organization Development 7th edition

four change strategies part 2 of 2
Four Change Strategies (part 2 of 2)
  • Forced evolution - incremental adjustments over longer period without support of culture.
  • Dictatorial transformation - used in times of crisis; major restructuring running counter to internal culture.

An Experiential Approach to Organization Development 7th edition

od in practice masters of transformation part 1 of 3
OD in Practice: Masters of Transformation (part 1 of 3)

Vince Lombardi, coach of Green Bay Packers, and Jack Welch, CEO of GE, provide insight into 2 successful change agents.

An Experiential Approach to Organization Development 7th edition

od in practice part 2 of 3
OD in Practice (part 2 of 3)

Lombardi: “We’re not just going to start with a clean slate, we’re going to throw the old slate away.”

Welch: “I tell people, if this place is stifling you shake it, shake it, break it. Check the system, because it wants to be a bureaucracy.”

An Experiential Approach to Organization Development 7th edition

od in practice part 3 of 3
OD in Practice (part 3 of 3)

Lombardi: Got rid of players, even those he liked, when they did not perform.

Welch: “No leader enjoys making the tough decisions. … Keeping people around who aren’t going to grow and prosper is ‘false kindness.’ ”

An Experiential Approach to Organization Development 7th edition

the corporate culture
The Corporate Culture

Culture includes shared values and behaviors formed by members of organization.

CEO and managers’ actions, not words, produce culture.

A culture is organization’s major strength when consistent with strategies.

An Experiential Approach to Organization Development 7th edition

strategy culture fit
Strategy-Culture Fit

Strategy:

  • Course of action used to achieve objectives.
  • Relates resources of organization to opportunities in environment.

Culture:

  • Set of values for setting priorities.
  • Critical factor in implementation of strategy.

An Experiential Approach to Organization Development 7th edition

definition of culture
Definition of Culture

System of shared values held by members that distinguishes one organization from another.

An Experiential Approach to Organization Development 7th edition

core characteristics of culture
Core Characteristics of Culture

Individual autonomy.

Sensitivity to customers and employees’ needs.

Support and assistance provided by managers.

Interest in having employees initiate new ideas.

Openness of communication channels.

Risk-seeking encouraged.

An Experiential Approach to Organization Development 7th edition

sharing the vision
Sharing the Vision

Many management theorists feel vision is essence of leadership.

Vision involves several stages:

  • Share the vision.
  • Empower the individual.
  • Acknowledge performance.
  • Reward performance.

An Experiential Approach to Organization Development 7th edition

figure 15 2 sharing the vision
Figure 15.2Sharing the Vision

An Experiential Approach to Organization Development 7th edition

strong versus weak cultures
Strong Versus Weak Cultures

Strong culture characterized by basic values intensely held and widely shared.

Weak culture may be seen in young company or one with high turnover.

Culture product of key components: structure, systems, people, and style.

An Experiential Approach to Organization Development 7th edition

figure 15 3 relative strength of cultures
Figure 15.3Relative Strength of Cultures

An Experiential Approach to Organization Development 7th edition

strategy culture matrix part 1 of 3
Strategy-Culture Matrix (part 1 of 3)

Four basic alternatives in determining strategy changes:

  • Manage change (manageable risk)
      • Change important and compatible with culture.
      • Use cultural reinforcement as strategies.

An Experiential Approach to Organization Development 7th edition

strategy culture matrix part 2 of 3
Strategy-Culture Matrix (part 2 of 3)
  • Reinforce culture (negligible risk)
      • Forge vision that emphasizes shared values.
      • Reinforce existing culture.
  • Manage around culture (manageable risk)
      • Change important and incompatible with present culture.
      • Reinforce value system, reshuffle power, use leverage in the organization.

An Experiential Approach to Organization Development 7th edition

strategy culture matrix part 3 of 3
Strategy-Culture Matrix (part 3 of 3)
  • Change strategy to fit culture (unacceptable risk)
      • Change important but incompatible with culture.
      • Changing culture is explosive, long-term process that may be impossible.
      • Determine if strategic change is viable alternative or if strategy should be modified to fit more closely with existing culture.

An Experiential Approach to Organization Development 7th edition

figure 15 4 strategy culture matrix
Figure 15.4Strategy-Culture Matrix

An Experiential Approach to Organization Development 7th edition

our changing world all the information at google part 1 of 2
Our Changing World: All the Information at Google (part 1 of 2)

Google managed by CEO Schmidt and the two founders, Page and Brin.

Decisions made by 3-way discussions.

Engineers migrate to projects that interest them.

An Experiential Approach to Organization Development 7th edition

our changing world part 2 of 2
Our Changing World (part 2 of 2)

The VP of engineering, “We’re encouraging creativity and tolerating chaos.”

Googles’ strategic moves set them apart from competition.

One goal is to put all of world’s information into Google.

An Experiential Approach to Organization Development 7th edition

strategic change management
Strategic Change Management

Seeks to align organization’s strategy, structure, and human resources to fit with environment.

Organizations composed of 3 systems:

Technical Political Cultural

These systems in perpetual interaction with environmental change and uncertainty.

An Experiential Approach to Organization Development 7th edition

three steps to strategic change
Three Steps to Strategic Change

Step 1: Develop image of desired organization.

Step 2: Separate systems and intervene separately in each one.

Step 3: Plan for reconnecting three systems.

An Experiential Approach to Organization Development 7th edition

figure 15 5 environmental forces and organizational systems
Figure 15.5Environmental Forces and Organizational Systems

An Experiential Approach to Organization Development 7th edition

reasons for large scale cultural changes
Reasons for Large-Scale Cultural Changes

Company has strong values that do not fit changing environment.

Industry very competitive and changes quickly.

Company mediocre or worse.

Firm about to join ranks of very largest.

Firm small but growing rapidly.

An Experiential Approach to Organization Development 7th edition

cautions in cultural change
Cautions in Cultural Change

Cultural change can be difficult and time consuming.

Culture change should be attempted only after less-difficult solutions have been ruled out.

An Experiential Approach to Organization Development 7th edition

key words and concepts
Key Words And Concepts
  • Culture - reflects organization’s past and is rooted in firm’s history.
  • Incremental approach - long-term planned change that relies on collaboration.
  • Organization transformation (OT) - drastic, abrupt change to structure, management, and culture.

An Experiential Approach to Organization Development 7th edition

slide38
Strategic change management - focuses on alignment with strategy, structure and human resources systems and a fit with environment.
  • Strategy - course of action used to achieve major objectives.
  • Strategy-culture matrix - assess readiness of culture for strategic changes.

An Experiential Approach to Organization Development 7th edition

slide39
Technical, political, and cultural systems - Organizational systems of strategic change management model.
  • Transformational change - immediate drastic change accomplished by directive methods.
  • Vision - a mental image of a possible and desirable future state of organization.

An Experiential Approach to Organization Development 7th edition

preparations for next chapter
Preparations for Next Chapter
  • Read Chapter 16.
  • Complete Profile Survey and Profile Form in Simulation 16.1, Part A, Step 1.
  • Complete Step 1 of OD Skills Simulation 16.2.

An Experiential Approach to Organization Development 7th edition