MGTO650N Managing Organizational Change

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MGTO650N Managing Organizational Change

• Xueguang Zhou
• MGTO, HKUST

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Topics for today

• House-keeping business
• Question for discussion
• What are the challenges in organizational change?
• Close-up Lessons from 3Ma permanently changing
  organization
• Analytical tools
• Vocabularies, concepts, and models
• Overview of the course

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What this course is about

• Organizations change all the time
• Disruptively, continuously
• Intentionally, unintentionally
• Why a course on organizational change
• Instances of failures to change
• Instances of successful turnarounds
• Frustrations about change at both ends of the
  table
• Agents of change
• Recipients of change

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Format and Requirements

• Format
• Instructors presentation
• Case study, team presentation
• Debate and class discussion
• Readings
• Requirements
• Class participation
• Team project
• Final examination
• Formation of teams
• Grading

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Q What are the challenges for organizational
change?

• An observation Most large companies at the
  beginning of the 20th century disappeared by the
  end of the century. Why?
• Close-up The case of Robin Hood
• Populist rebellion against excessive tax
  collection
• Rob from the rich and give to the poor
• Established the camping basis in Sherwood Forest

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• To this day, Robin Hood remains famous for
• bringing together the heroes inhabiting
• Sherwood Forest, but its growth has produced
• a new management challenge. Our task is to
• diagnose and propose ways to better address
• managing in this changing environment.

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Robin Hood

• Is there a problem in Sherwood Forest?
• What new options should be considered?
• Which do you recommend?
• In what ways has Robin Hoods leadership style
  previously been most successful?
• What are his weaknesses at this point?
• Have you seen any of the types of management
  problems in this case in your own work experience?

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The organizational chart
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Issues related to growing pains

• Increasing organizational size
• Resources become scarce
• Food supplies, finance
• Change of mission, identity?
• From confiscation to fixed transit tax
• Increasing competition
• The sheriffs increasing threats
• Strategic alliance
• Conspiracy against Prince John?
• Similar patterns in other types of organizations?

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The Five Phases of Growth Larry Greiner
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Organization Practices During Evolution in the
Five Phases of Growth
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Organizational Change Exercise

• The overall phase (of Greiners five) in which I
  see my organization now is
• 1 2 3 4 5
• In 10 months, the phase in which I anticipate my
  organization will be is
• 1 2 3 4 5
• Which of these phases have you seen it move
  through?
• 1 2 3 4 5
• Think back on how the transitions were
  accomplished.

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Questions for discussion

1. Why is it difficult to change?
2. What is your experience regarding change?

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Issues related to organizational change

• Strategic
• Leadership visions, anticipatory action
• strategies in timing,, initiation, coalitions
  mobilization
• Political
• Vested intereststhe politics of change
• Structural
• The power of organizational routines
• Informal networks
• Cultural
• Stability in experience, expectations
• Psychological contracts

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STRATEGIES OF ORGANIZATIONAL CHNGE 1.
Change or Stability? 2. Change from strength
or from weakness? 3. Change from top-down or
from bottom-up? 4. Using existing structure
or creating new structure? 5. Clear goals or
ambiguous goals? 6. Focus on short-run gains
or long-term goals? 7. Incremental changes
or discontinuous changes?
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Case study3M The Permanently Changing
Organizations

• One of the ten most admired corporations
  Fortune annual poll of American CEOs.
• The 3M model
• Continuous technological innovation
• Institutionalized individual entrepreneurship
• Market responsiveness
• How is this possiblewhat are the challenges?
• Institutionalized individual entrepreneurship?
• Growth versus decentralization?
• Balance between structure, culture, versus change?

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3M A brief history

• Established in 1902, producing abrasives and
  adhesives products.
• Benefited from product innovation in the early
  days
• The culture of individual entrepreneurship
• The McKnight era, 1929-1966
• Organizational design for continuous changes
• The Lou Lehr era, 1980-1985
• Reorganization and reorientation
• The Jake Jacobson era 1986-1991
• The orientation to competition in existing
  markets
• Main characteristics
• Changes and evolution in adaptation to
  environments
• Changes in organizational attributes for
  innovation

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Challenge 1 Entrepreneurship versus structure

• Innovation the spirit of entrepreneurship
• Competition through new products
• Competition through new niches
• The dilemma between entrepreneurship and
  structural differentiation
• The 3M way
• External demands and internal capabilities
• Decentralization locus of decision at lower lab
  units
• Organizational design to facilitate lateral
  communication
• The strategy of growth through new niches, rather
  than competition in existing markets.

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Challenge 2The role of organizational culture

• Organizational culture norms, expectations, and
  tacit knowledge
• The 3M way
• Innovation is the center of organizational
  culture
• Resistance to bureaucratic intervention is
  encouraged
• Contribution to innovation is greatly
  respectedlegends, institutional memories,
  ceremonies.
• Structure versus culture
• Cultural The value of knowledge sharing
• Structural Technical Council, Technical Forum,
  lateral interaction

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Challenge 3Human resource practice

• The roles of rewards and incentives
• The role of loyalty for 3M
• The 3M way
• Rewards for innovation
• Dual track of promotion and recognition
• Tolerance of well-intentioned failures

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• Mistakes will be made, but if a person is
  essentially right, the mistakes he or she makes
  are not as serious in the long run as the
  mistakes management will make if it is
  dictatorial and undertakes to tell those under
  its authority exactly how they must do their job.
  Management that is destructively critical when
  mistakes are made kills initiative, and it is
  essential that we have many people with
  initiative if we are to continue to grow.
• William L. McKnight

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Challenge 4Leadership and Strategic Vision

• The role of leadership
• Allowing failures
• Patient with experimentation
• Strategic visions
• The link between structure, culture, and growth
  strategies
• The evolution of strategies
• The 25 rule
• From single market to multiple markets
• From new market niche to competition in existing
  markets

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Unanswered Questions

• Politics in organizations
• Vested interests in existing technologies,
  products
• Competition, turf wars among labs, divisions
• Culture
• How is it sustained with the flow of people in
  organizational growth?
• The costs of innovation
• Failures, start-up costs, learning curves
• Demands for new structures, resources
• Organizational Life Cycle
• Entrepreneurship, expansion, structural
  differentiation, and associated challenges
• Changes in environments
• Imitation-competition from other companies

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Three Lenses to see Organizational Change
Political interests coalitions
resources/power
Cultural artifacts values assumptions
Strategic leadership timing
process alignment
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The strategic lens

• Organization as a system designed to achieve
  certain goals
• Focus on principles for organizational design
• Strategic intent
• Linking strategy and organization
• Strategic grouping
• Strategic linking of jobs, departments, and
  functions
• Alignments of rewards incentives with grouping
• Fit between organization and environments

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Processes in strategic design
Assess environment (Threats and
opportunities Industry analysis, etc.)
Strategic Organizational Design (grouping, Linkin
g, Alignments)
Strategic Intent
Assess organization (Core competences, Organizatio
nal capacities)
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The political lens

• Organization as a political coalition
• Identify and map relationships among
  stakeholders, and their different interests and
  goals
• Focus on
• sources and strength of power
• distribution of resources
• coalition building
• bargaining processes

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The Stakeholder Model
Professional Community
Shareholders
Top Managers
Customers
Researchers
FIRM
Local Community
Middle Managers
Workers
Suppliers
Unions
Banks/Creditors
Public interest groups (e.g., environmental
groups)
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The cultural lens

• Organization as a system of symbols and meanings
• The importance of history and interpretations
• Official culture versus subculture
• Formal authority versus informal social control
• Cultural context and strategic design

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Three Lenses to see Organizational Change
Political interests coalitions
resources/power
Cultural artifacts values assumptions
Strategic leadership timing
linking process
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Goal of the course A repertoire of managerial
skills

• Vocabularies how do we talk about changes?
• Issues leadership, coalition building, culture,
  etc.
• Analytical models how do we analyze changes?
• Political
• Cultural
• Strategic
• Hand-on practicehow do we manage changes?
• Case studies
• Simulation
• Debates, brainstorm, collective diagnosis

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Outline of the Course
1. Why Change? Session 1. Issues related to
organizational change Session 2. Leadership
in organizational change 2. Processes of
Organizational Change Session 3. Individual
level agents and incentives Session 4.
Interpersonal Social relations and culture
Session 5. Putting things together the EIS
simulation Session 6. Organizational
Strategic dimensions 3. Summary and Reflections
Session 7. Strategies of organizational
change Session 8. Final examination
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Key Takeaways Managing Growth

• Know where you are in the development cycle.
• Be prepared to dismantle current structures
  before a crisis hits.
• Realize new solutions breed new problems.
• Continually strive to become a learning
  organization.

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Different images of organizations

• Organization as a system for rational design
• Organization as a political coalition
• Organization as a system of symbols and meanings
• What are the implications for understanding
  organizational changes?
• What are the implications for managing changes in
  organizations?

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Overview of the course
Leadership Agents Recipients