Organizational Change

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Organizational Change
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Often viewed as the best part of the job by
managers. Making the organization better.
Putting a person stamp someplace. Having an
impact.Managers careers often based on making
positive changes.
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Examples of change topics

• Financial--Downsizing. Dealing with internal
  audit recommendations. EAI
• Strategic--changing strategic goals (turnaround).
  Address IBM and EK
• Organizational (higher levels)
• Developing policies and procedures
• New product development

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• Implementing a new customer service program such
  as phone courtesy
• Technology development
• ISO certification
• Adopting a common MIS platform across departments

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Two cases

• Success--IBM
• Limited Success--Eastman Kodak

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What did Gerstner do?

• Retrenchment
• Reanalyzed the market. Main Frame to PCs.
  Strength was service--consulting. This has been
  major growth area for IBM.
• Money put into R and D. IBM leader in Patents.

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We will continue to improve the execution of our
strategies to produce marketplace wins, chiefly
by strengthening and leveraging IBM's unique
breadth of people, skills and technology assets
many of our competitors are trying furiously to
replicate.
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• Reorganized--Example with PC division. Cost
  cutting to be competitive with Dell.
• Outsourcing production. Reduce parts and models,
  just in time delivery. Increasing inventory
  turns.
• Created Single world wide sales division.
  (Functional overlay).

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• New hires Gerstner. Hired Dells procurement
  manger.
• Change culture from Academy to baseball team.
  Slow process. Top down, turnover, new hires.
• Today--IBM rebound. Dominant player in PC market
  challenging Compaq. Loss of 7/share in 1993 to
  Gain of 6/share 1997. Major consultant 2.

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• This summer near historic new highs, but caught
  in current down draft.

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Eastman Kodak p. 423-424

• New CEO--Fisher. .
• Slow to retrench--gentle touch and gradual.
• Change culture and promote risk taking.
• Strategy New products--Digital cameras not
  player in the market. Royal Gold film.

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Build a world-class, results-oriented culture . .
. by providing customers and consumers with
solutions to capture, store, process, output and
communicate images to people and machines
anywhere, anytime . . . bringing differentiated,
cost-effective solutions . . . to the marketplace
quickly and with flawless quality through a
diverse team of energetic employees with the
world-class talent and skills necessary to
sustain Kodak as the World Leader in Imaging. In
this way, we will achieve our fundamental
objective of Total Customer Satisfaction, and our
consequent goals of Increased Global Market Share
and Superior Financial Performance."
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• Change the culture--top down to teams. Slow to
  change.
• Not the classic turnaround. Flat to declining
  sales.

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Latest with EK

• It has done large scale downsizing (Fall 97). In
  spite of continued loss of market to Fugi
  (largely based on price), profits finally
  increased 50 (Spring 98). Recent lowest price in
  5 years.
• Currently engaged in price war.
• Profits simply based on reduced operating costs.

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• Another corporate restructuring of the film
  division.

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In teams

• What are common elements
• What are differences

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Creating changes as a process.
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Most important advice about creating change.

• Its often political.
• Within a department it may be less political.
  Example, reorganize jobs.
• Between departments it highly political.
• Culture wars.

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Two aspects of Politics

• Power (all people involved with change have some
  power)
• Self-interest (all people involved with change
  have some self-interest) Some cases
  differentiation and sub goals.

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• To create change you need to manage power issues
  and self-interest issues.
• Important to not only gain acceptance but gain
  commitment to the change.

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Following Dragonfly through Change

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• Usually identifying a gap and preparing for a
  change. Motivational. We have a problem and
  change is required.
• Bad news is good news for change.
• Opportunity seeking--changes in strategic
  orientation.

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Waremart

• How did ted unfreeze?

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Resistance to Change
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Resistance to Change
Group Inertia
Threat to Existing Relationships
Structural Inertia
Organizational
Threat to Existing Allocations
Limited Focus of Change
Threat to Expertise
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Overcoming Resistance to Change
Education and Communication
Participation
Negotiation
Facilitation and Support
Coercion
Manipulation and Cooptation
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• What were sources of resistance?

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Ted used which of these methods
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IBM

• Emphasized force coercion. (downsizing and
  dictate). Did use some others as well

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EK used

• Rational persuasion as first choice but used
  others too later (such as downsizing and
  restructuring).
• Also tried shared power through teams and mixed
  success. Best example was Royal gold.

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Tradeoffs between speed and acceptance

• Downsizing which would probably be best.
• Policies and procedures governing family leave
  which would be best.

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Acceptance and continuity

• Administrative support
• Organizational support (restructure jobs)
• Peer support

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Resource support

• Education
• technology

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Reward systems and motivation

• Difficult

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This is the execution.

• Controlling issue. Monitor progress.
• Early identification of problems.
• Helps to share successes

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Example

• Cases to date.
• Different ways to do it.

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How do you manage change.

• What would you do?
• Sources of resistance?
• How would you overcome those sources.

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Summary

• Managing change most demanding and challenging
  (in positive sense) part of the job. If you like
  this, excellent chance you will be a successful
  manager.

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• Political--error assume boss orders it and it
  will occur.
• Different ways to achieve results. Tradeoffs.
• Resistance to change is critical aspect to manage
  and manage early in the process.

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Short note on organizational development

• Comprehensive effort to improve organizational
  adaptability and flexibility.
• Change is constantly needed

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Bottom up change

• Top down change is often reactive.
• Adaptive organizations need bottom up change.
• Research clearly shows that bottom up change is
  about 10 time more likely to be successful than
  top down change.
• P. 392 offers many different ways to promote OD.
  You are likely to be tested on this.