RADICAL ORGANIZATIONAL CHANGE

Presented by Amanda Hinojosa

Radical change

Focus on whether and how an organization can move from one organizational form to another

Background

1960s-change seen as non-problematic, assumed it would happen when necessary Structural-contingency theory Strategic choice theory

1970s-change became seen as problematic, highlight obstacles hindering change Resource-dependency theory Configuration theory Institutional theory Ecological theory

Background

Organizations reactive, environments determinant Structural-contingency theory Institutional theory Ecological theory

Organizations proactive, can shape their environment Resource-dependence Strategic Choice

Theories of Organizations 1960-1985

Structural-contingency theory Strategic Choice Configuration Theory Behavioral Theory of the Firm Resource dependence Ecological Theories Networks

CHANGE according to:Structural-Contingency Theory

Organizations out of alignment will move to gain a better fit I.e. if environment becomes uncertain,

organization will become more flexible

CHANGE according to:Strategic Choice

Organizations are driven by their contingencies

Executives have minimal discretion in designing their organizations

Organizations can choose not to adapt (Child, 1972)

Critique: Donaldson (2001) says evidence disconfirms strategic choice: choice over structure is limited

CHANGE according to:Configuration Theory

Miller and Friesen 1980; 1982;1984; Miller 1981; 1982)

Strategies, structures and processes should be considered holistically Orchestrating themes

Momentum and Simplicity work against change

CHANGE according to:The Behavioral Theory of the Firm

Cyert and March (1963): How organizations adapt to their environments

Adaptation to shifting circumstances is normal Change is evolutionary (not dramatic) Firm’s history, encoded in its routines, shapes and reproduces

its responses Elaborates the routines used by organizations as they seek

alignment with their context and explains why radical change occurs less frequently than convergent change

Gives precision to why change happens Identifies the importance of aspiration defined performance

feedback The theory underlines that organizational adaptation is

dynamic, an ongoing consequence of organizational learning.

CHANGE according to:Resource-Dependency Theory

Pfeffer and Salancik (1978), Aldrich (1979) Acknowledges the interaction of market and

regulatory structures. Organizations attempt to control their contexts Connects exogenous shifts to 2 intra-

organizational dynamics Cognitive frames of senior executives Distribution of power between functional groups

Focuses on the economic context, introduces importance of regulatory structures

CHANGE according to:Neoinstitutional Theory

Tolbert and Zucker (1983) Process model of change (pre, semi, full

institutionalization) Institutionalized norms and values affect

the choice-set and choice processes available to organizations

Level of focus is the organizational field Recognition that insititutionalized

structures embody patterns of power and privilege.

CHANGE according to:Ecological Theories

Structural inertia theory—timely organizational adaptation is difficult to achieve

Routines lead to reliability but also make organizations resistant to structural change

Macro-contextual factors interact with organizational actions to constantly produce novel organizational forms

Specifies the exogenous variables that affect organizational alignment and shape organizational performance

Ability of organizations to achieve adaptive change is not evenly distributed

CHANGE according to:Network Theories

Reinforces that organizational change cannot be understood without giving proper attention to the interorganizational network level of analysis Ability of organizations to change is affected by

their embeddedness within a network of organizations, which affects speed and content of change

New organizational forms are likely to arise from the periphery of the field because central organizations are more caught within the reproductive network of exchanges

Three Theories of Change

Punctuated Equilibrium Determinants and locus of change How manage organizations manage change

Neo-Institutional approach to change How changes occur in the choice-set of

available forms Continuity and change

Change at the organizational level

1. Punctuated Equilibrium

Periodicity of change Dynamics of Change (Why does change

occur and where) Whether organizations can adapt (what

are the enabling factors?)

Tushman and Rosenkopf 1992

Periodicity of Change

1. Technological discontinuities punctuate and destabilize prevailing market practices

2. Era of ferment where competing expressions of the new technology struggle for adoption.

3. Dominant design emerges4. Incremental changes improve the

dominant design

Dynamics of Change

Why organizations change? Technological discontinuities that destroy or

enhance the competence of existing firms (Tushman

Where change occurs Competence-enhancing technologies more

likely to originate from incumbents Competence-destroying technologies are

promoted by new start-ups

What circumstances enable or constrain organizational adaptation?

Organizational forms- the ambidextrous organization (O’Reilley & Tushman 2004) Separate structures used for exploiting current

technologies and facilitating breakthrough technologies

External integrative capability—identify and synthesize knowledge from outside the firm

Complementary assets such as marketing and distribution systems or service networks (Teece 1986) Enables orgs to ‘buy time’ for adaptation

2. Neo-Institutional approach to change

Approaches radical change as change in the range of socially legitimated forms

Notes the differential embeddedness of organizations within fields—proivdes clues to locus of institutional entrepreneurship

Articulates the role of theorization in the legitimation of new forms—explicit attention to use of language

Addresses why some organizations change and others don’t by pointing to intraorganizational dynamics that link organizations to their context and direct their responses to it

Stages of Change

Institutionalization Deinstitutionalization

Arises from precipitating jolts or endogenous sources (i.e. contradictions)

Pre-institutionalization Localized institutional entrepreneurship (peripheral

players) Emphasis on pragmatic legitimacy

Theorization Process whereby new organizational forms gain

legitimacy and how renegotiations of meaning take place Diffusion

3. Continuity and change

No single theory of change, because orgs are different in their specific contexts and histories

Content of change-the what of change Characteristics of the change

Outer and inner context- the why of change Outer-economic, political and social environment Inner-capacity of organization to recognize the need for

change and to formulate & implement a response Process-the how of change

Actions, reactions and interactions of the various interested parties as they negotiate around proposals for change

Change is problematic because: Cognitive frames that blind org.

members to the need for change Modern organizational forms are more

complex than predecessor forms Holistic nature of organizational systems

Multiple parts of the org. have to move before performance benefits begin to be realized

Will change occur?

Change will not occur without sustained market or institutional pressures

Pressures must be recognized by skillful leaders who prepare organizations for change by delegitimating existing frames and legitimating new ones

Leaders must juggle between persuading members to change and making change occur speedily

Leadership processes

Effective processes include simplifying mechanisms that guideand stabilize progress towards change

Leadership has to recurrently simplify the purpose of change (why) and the processes of achieving it (how)

Current questions about Change

What are the dynamics that precipitate change?

Where do new organizational forms arise and how is the choice-set of socially approved organizational templates extended or revised?

What are the temporal and organizational processes by which change unfolds?

Can change be successfully managed, and if so, how?

Emerging questions

In what ways do institutional and market structures interact with each other?

What are the consequences of change? Where and how do new organizational forms

arise? To what extent and by which means can

organizations exercise choice between choice-sets? What are the consequences of organizations

moving within a choice-set? (i.e. vertically integrated M-form to geographically dispersed organizational network)