Chapter 15 organization and strategic change

2

CHAPTER 15: ORGANIZATION AND STRATEGIC

CHANGE

Prof. Somboon MongkolsombatPresented By: Mr.Chay Chandara, Mr. Sim SokhuochDate: 23rd , August 2013

LEARNING OBJECTIVES• Identify and define organization in

relation to the change process• Understand the basic strategy-culture

matrix and approaches to changing the culture to fit the strategy

• Recognize the importance of corporate culture and its relations to strategy

3

CONTENTI. STRATEGY AND

TRANSFORMATIONII. ORGANIZATION

TRANSFORMATIONIII.THE CORPORATE CULTUREIV.STRATEGIC CHANGE

MANAGEMENTV. CHANGE THE CORPORATE

CULTUREVI.CAUTIONS IN CULTURE

CHANGE

4

5

I.STRATEGY AND TRANSFORMATION

When the “pride of position” starts to work.

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

6

I. STRATEGY AND TRANSFORMATION ( CON’T)

When organizations are in desperate need of change or else they will face of change ore else bankruptcy/takeover, radical changes may be the only choice.

Organizational transformation refers to drastic changes in how an organization functions and to its environment.

7

OD strategies represent more gradual approaches to strategic change.

OT approaches are drastic, abrupt change to total structures, management processes, and corporate cultures; may or may not be developmental.

II. ORGANIZATION TRANSFORMATION

Organization transformations can occur in response to or in anticipation of major changes in the organization's environment or technology.

8

II. ORGANIZATION TRANSFORMATION (CON’T)The distinguishing features of the revolutionary change efforts are: 1. Change is Triggered by Environmental and

Internal Disruptions2. Change is Systemic and Revolutionary3. Change Demands a New Organizing

Paradigm 4. Change is Driven by Senior Executives and

Line Management.5. Continuous Learning and Change.

9

II. ORGANIZATION TRANSFORMATION (CON’T)1. Change is Triggered by Environmental and

Internal DisruptionsIndustry discontinuitiesProduct life cycle shiftsInternal company dynamics

10

II. ORGANIZATION TRANSFORMATION (CON’T)2. Change is Systemic and Revolutionary

Transformational change involves reshaping the organization's culture and design elements such as structure, information systems, human resources practices, and work design.

Rapid change enables the organization to reach a period of smooth growth and functioning sooner, thus providing it with a competitive advantage over those firms that change more slowly. 

11

II. ORGANIZATION TRANSFORMATION (CON’T)3. Change Demands a New Organizing Paradigm “Organization learning" or "continuous

improvement," often are used to help members visualize the new paradigm.

Decentralized teams and business units accountable for specific products, services, or customers; and participative management and teamwork.

13

II. ORGANIZATION TRANSFORMATION (CON’T)4. Change is Driven by Senior Executives and Line Management.

Enabling

Energizing

Envisioning

14

II. ORGANIZATION TRANSFORMATION (CON’T)6. Continuous Learning and Change

I CAN THE TIME BUT THE TIME CAN

NOT WAIT ME.

15

II. ORGANIZATION TRANSFORMATION (CON’T)There are several possible

large-scale strategies

Incremental- Long-term planned change.Transformative – immediate, drastic change.

16

III. THE CORPORATE CULTURE

What Is Organizational Culture?

Organizational culture refers to a system of shared assumptions, values, and beliefs that show employees what is appropriate and inappropriate behavior

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

17

III. THE CORPORATE CULTURE (CON’T)

Why Does Organizational Culture Matter?

Organizations that have a rare and hard-to-imitate organizational culture benefit from it as a competitive advantage.There is increasing evidence that firms with effective corporate cultures have increased productivity and profits.

18

A. Manage change (manageable risk)

• Change important and compatible with culture.

• Use cultural reinforcement as strategies.

III. THE CORPORATE CULTURE (CON’T)

1. Strong Versus Weak CulturesFour basic alternatives in determining

strategy changes:

19

Relative Strength of Corporate Cultures

20

III. THE CORPORATE CULTURE (CON’T)

1. Strong Versus Weak Cultures

`B. Reinforce culture (negligible risk)• Forge vision that emphasizes shared

values.• Reinforce existing culture.

21

C. Manage around culture (manageable risk)• Change important and

incompatible with present culture.• Reinforce value system, reshuffle

power, use leverage in the organization.

III. THE CORPORATE CULTURE (CON’T)

1. Strong Versus Weak Cultures

22

• 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

III. THE CORPORATE CULTURE (CON’T)

1. Strong Versus Weak Cultures

D. Change strategy to fit culture (unacceptable risk)

23

2. Strategy-Culture Matrix

24

VI. STRATEGIC CHANGE MANAGEMENT

Tichy’s model seeks to align organization’s strategy, structure, and human resources to fit with environment.

Organizations Composed of 3 Systems:

Technical solve production problems.Political solve allocation problems of

resources and power.Cultural solve value/belief problems

25

Environmental Forces and Organizational Systems

26

V. CHANGE THE CORPORATE CULTURE

Five 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.

27

VI. CAUTIONS IN CULTURE CHANGE

Cultural change can be difficult and time consuming.Culture change should be attempted only after less-difficult solutions have been ruled out.

References1. Brown, D.R. & Harvey, D. (2006). An experiential

approach to Organizational development, (7th ed.). ,Upper Saddle River, NJ: Prentice Hall.

2. http://www.zainbooks.com/books/management/organization-development_29_interpersonal-and-group-process-approaches-1.html

28

Company

LOGO