Strategic Change Management: Four
Reactions
Organizational transformations are said to have a miserable success rate. This précis chronicles four short takes on theoretical foundations of organizational change; evolutionary and revolutionary change; the Change Formula; and levels of organizational change.
Olivier SerratTheoretical Foundations of Organizational Change: Back to the Future
Be they private, public, religious, third sector, or otherwise, organizations are among the most significant structures by and through which societies, their groups, and individual members function (Pugh, 2007) And so, it is vital to make out the purpose for which organizations come about (e.g., to meet a need or pursue a collective goal), how that influences their design, how they work, and how they change from within or without (including how stakeholders might guide the process of change). Toward this, beginning 100 years ago, organization theory has proposed explanations of such diverse topics as the organization in its environment, the structure of organizations, management and decision making, people in organizations, organizational change, organizational learning, motivation, and productivity and performance (Pugh, 2007)
There is no grand unified theory of organizations but because results are of the essence the subject has ever since Weber's (1978/1921) seminal work been intertwined with references to organizational change. Of course, organizational change is as old as the first organizations (and so probably harks back to the Neolithic period). Notwithstanding, focusing on the times when the study of organizational change truly developed, that is, from the late 1950s, Burke (2014) a popular textbook with a fifth edition dated 2017 offered a select list of fore running theories. In the Neoclassical and modern periods that followed Weber (1978/1921), the milestones that Burke (2014) identified and occasionally pointed out the shortcomings of are scientific management (aka Taylorism), the Hawthorne studies, industrial psychology, survey feedback, sensitivity training, sociotechnical systems, organization development, the managerial grid, coercion and confrontation, and management consulting (p. 29). Strictly speaking, not all of these organizational theories have to do with organizational change but as mentioned above results are the sine qua non and ultimately always exact transformation. To help understand organizational change (and, presumably, the root causes behind the emergence of the forerunners that it singled out), Burke (2014) emphasized open system theory and the (surely interrelated) shift of thinking from physics—I would say engineering—to the life sciences as the primary explanatory school of thought (to which I would add political science, psychology, and sociology).
Burke (2014) made much of biology. "An organization is open because of its dependence on and continual interaction with the environment in which it resides" (p. 54) Burke's (2014) explanation was that, much like any organism, organizations are characterized by input, throughput (transformation), and output as well as a feedback loop reconnecting output to input in a total system, consideration of which helps understand the behavior of the individual entities it hosts. Especially when they must be reliable in what they do and accountable for what they do, the strength and utility of organizations derives from inertia. Even so, organizations must still be compatible with their environment to survive, Burke (2014) emphasized: therefore, through the ages, there has been tension between the forces of stability and the need for change, which until the 1990s was not that great.
The organizational theories that Burke (2014) drew attention to were elaborated many years ago, principally in the 1960s and 1970s, and have remained in the repertoire largely intact since that time (Pugh & Hickson, 2007). Burke's (2014) list is not exhaustive: he might have added action learning, administration, business process management, ethics and social responsibility, excellence, globalization, hierarchy of needs, the learning organization, motivation hygiene, networks, organizational leadership, performance feedback, strategy as practice, Theory X and Theory Y, and Total Quality Management, to name a few other management ideas and topics that had come of age by the 2000s (Hindle, 2008) Even so,
Davis (2010) wondered where the new theories of organization are, commenting that "organizational research can sometimes appear like a living museum of the 1970s" (p. 3) More challengingly still, Hamel (2007) contended that management is a maturing technology that has witnessed few genuine breakthroughs since Weber (1978/1921) and Taylor (1911) set the ground rules 100 years ago (Serrat, 2010)
Are early organizational theories continuingly relevant in our ever changing world? "Current management literature is full of practical advice and suggestions: but it lacks a way to effectively organize diverse insights. Like the portolans and rutters of yore, it can only orient people relative to a predetermined path and destination, not relative to a broader terrain," opined Senge et al. (1999, p. 5). Theories generate both ways of seeing and ways of not seeing Much as the proverbial onion, new organizational theories have added to the corpus of knowledge; they have seldom completely replaced earlier paradigms in a field that, excepting biology, is drawn entirely from the social sciences. Because the emergence, interconnectivity, and influence of organizations keeps growing, we can expect additions to the body of knowledge in organization theory. And yet, in the wake of Kotter's (1995) seminal article, study after study proclaims that about 70% of change efforts fail (Beer & Nohria, 2000) Suggestions to maximize the effectiveness of organizational change put the onus on leaders and are characteristically technocratic, thus requiring further consulting services, with communication and stakeholder management identified as consistent factors (Levy, 2021) Three areas that, to my mind, have deep implications for organizational change in the future are the need to embrace complexity, the fact that knowledge is a flow and not a fixed asset, and the reality that some types of organizations are more attractive to some people than to others and so invite consideration of how one might maximize "fit". I cannot see that our pre eminent organizational theories speak to such an agenda. A great many other issues clamor for attention: sociomateriality, which concerns the intersection of technology, work, and organization; spirituality at work; and environmental sustainability are three examples. Organizational change theory must move back to the future. Looking forward, Mintzberg (1979) argued long ago that the only constant in organization theory pertains to the division of labor into various tasks to be performed and the coordination of these tasks to accomplish the activity for which an organization was set up.
Evolutionary Change and Revolutionary Change Meet Complexity Theory
Even if all must answer why, what, how, and who/where/when, not all organizational changes are the same: they can be discontinuous (revolutionary or transformational, but also episodic), continuous (evolutionary or transactional), strategic or operational, and/or total system or local option (Burke, 2014). Simplifying, Burke (2014) narrowed the choice to either evolutionary or revolutionary, presumably to juxtapose one against the other, and presents both types as planned Additionally, Burke (2014) overlooked the fact that the scope and depth of organizational change is always relative in the sense that what might be deemed, say, evolutionary in one organization (or a part thereof) might be considered revolutionary in another but few authors make that point in any case
On Burke's (2014) explanation, "revolutionary change, by definition, can be seen as a jolt (perturbation) to the system" (p. 76) After periods of equilibrium during which an organization maintains its system and overall patterns of rules, standards, mores, and processes changes in the environment and/or internal disruptions can create a need for change in the very structure of an organization. One example, cited in Burke (2014), is that of British Airways in the 1980s: after years of insularity in the face of deregulation in international air traffic, the company was spun out on the stock exchange by the Thatcher administration; once a government supported organization, it now had to survive on its own. The staff complement of British Airways was
slashed from 59,000 to 37,000 and personnel was instructed to serve a new mission, specifically, to provide superior service that would increase customer satisfaction and market share, neither of which had been given priority before.
Burke (2014) asserted that 95% of organizational changes are evolutionary, meaning, incremental (and usually referred to as transactional) According to Burke (2014), evolutionary change is slow and continuous; it does not drastically alter the fabric of the organization. Since most change is evolutionary, examples of it are a dime a dozen. Alas, continuous adjustments do not make for stimulating reading and case studies on evolutionary change never grace the pages of business journals. Suffice it to say that the nevertheless vital practice of evolutionary change entails such sundries as continual improvement (à la kaizen), meaning, "changing the way a product is packaged before shipment to the customer, instituting a new form of commission on sales for how salespeople will be compensated, developing a new set of products or services for an emerging market on the basis of demographic shifts, acquiring a smaller company to augment current business lines, and installing a new leadership development program for the top 300 executives in the organization, to name only a few examples" (Burke, 2014, p. 77) Importantly, lest we forget, the effects of such "tinkering" can cumulate to deliver substantial improvement: and so, there is no reason to denigrate evolutionary change; indeed, if organizations (and their personnel) paid more attention to the formulation of ongoing, progressive, and cumulative evolutionary change, they would less often have to suffer revolutionary change. A stitch in time saves nine: evolutionary change that is continuous, not just episodic, has a significant role to play and gives ground to disagree with Burke's (2014) assertion that "to assume that change in organizations is or can be rational is irrational" (p. 166).
Understandably, academics search for theories and much ink has been spilled on the relevance of the linear, open system model or the nonlinear complexity model to organizational change. Open system theory which replaced over the course of the 1950s 1980s the determinist, closed-system view of organizations as machines that had prevailed from the early 20th century submits that "[a]n organization is open because of its dependence on and continual interaction with the environment in which it resides" (Burke, 2014, p. 54). For instance, advocates of the open-system model see that "[an organization's] output into the external environment […] creates the potential for feedback, which in turn generates another form of input so that the organization can correct its throughput to improve its future output, thus helping to ensure long-term survival" (Burke, 2014, pp. 58 59). And yet, from the 1980s onward, complexity theory has suggested that uncertainty and nonlinearity can also inform management practice by shedding light on systemic interdependence that leads to emergence and engenders surprising dynamics (Serrat, 2009a). In short, complexity theory posits that change takes place all the time and that organizations can ill afford to tackle one issue at a time: instead, the proponents of complexity theory argue that organizations must transform themselves continuously, especially if they operate in fast moving sectors of the economy, such as enterprise software
It is informative to consider evolutionary change and revolutionary change from the perspective of complexity theory: of course, much depends on how strictly one is to follow their precepts, which come in subtle hues, shades, tints, and tones depending on the proponent. Worldviews need not be presented as entirely contradictory: it is not a matter of "either/or", "right/wrong", and "black/white" When binary thinking is involved, polarization follows and limits options in the real world, which more often than not happens to be grey. Evolutionary change that is continuous not just episodic and treated with the highest respect can through the feedback it both entails and affords give organizations the time they need to prepare for better or for worse,
the latter scenario involving the messy, nonlinear upheavals that revolutionary change engenders. At the same time, complexity thinking can assuredly help organizations become adaptable and fleet footed in situations of revolutionary change, which demand emergence or rapid response (in the complex or chaotic), not good practice or expertise (in the known or knowable).
The Change Formula: Whiter and Brighter
Much as people, of whom they are made, many organizations only accept change when it becomes more difficult to suffer than to change The Change Formula was predicated on the assumption that people are more motivated by avoiding loss than they are by seeking gains and improvements. "The Change Formula has undergone modifications since it was developed by Gleicher in the early 1960s to underscore what key factors and relationships can affect readiness for organizational change: in its first iteration, the Change Formula read C = (ABD) > X, where C = Change, A = Level of dissatisfaction with the status quo; B = Clear or understood desired state; D = Practical first steps to the desired state, X = "Cost" of changing" (Serrat, 2021a, p. 300) The Change Formula was first published in Beckhard (1975) and reproduced in Beckhard and Harris (1977) with attributions to Gleicher "Subsequently, Dannemiller refined the Change Formula to read D x V x F > R, where D = Dissatisfaction with how things are now, V = Vision of what is possible, F = First, concrete steps that can be taken towards the vision; and R = Resistance. (Note the addition of multipliers.) With other inputs by Beckhard and Harris (1987), the Change Formula now usually reads C = D x V x F x S > R, where C = Change; D = Dissatisfaction with how things are now; V = Vision of what is possible; F = First, concrete steps that can be taken towards the vision; S = Support systems; and R = Resistance (Serrat, 2021a, p. 300).
The Change Formula invites system wide questions to energize such interrelated actions that the combined value of the variables at the heart of the equation viz., D, V, F, and S becomes with multiplier effects greater than R:
• What is the role of dissatisfaction with how things are now? (How might dissatisfaction be gauged for instance with diagnosis, benchmarking, and feedback to provide direction?)
• What is the role of a vision of what is possible? (How might a compelling vision be defined?)
• What is the role of first, concrete steps that can be taken towards the vision? (What should the first steps be?)
• What is the role of support systems? (What is the place of, say, information and communication technology, business processes, monitoring and evaluation, human resource management, and other helpful mechanisms, singly and in unison?)
The Change Formula is a comparatively simple model. It highlights what parameters must be acted upon at all stages of a change effort. It also makes clear that the multiplicative effect of the key factors and relationships (viz., D, V, F, and S) must be greater than R (the resistance to change), the implication being that falling short on any of the four factors will make resistance to change impossible to overcome. Two reasons explain the popularity of the Change Formula: (a) it applies across the different types of change (although it is of undeniably greater relevance in the case of revolutionary or transformational change); and (b) it provides a clear road map for overcoming resistance, the factor it singles out as the malefactor behind the failure of change efforts.
That said, the Change Formula's assumption that resistance is the sole explanatory variable can easily be challenged Other assumptions of the Change Formula that rarely hold out are, for
instance, that (a) change springs from a "neutral" starting point, aka dissatisfaction, which organizational entities somehow experience in the same way; (b) change can be managed; (c) individuals and groups, including leaders, are objective; (d) change can be successfully launched by a series of concrete steps, for which capability exists; (e) resistance is organized, overt, and always a bad thing; and (f) change per se is a laudable goal (or outcome)
Levels of Organizational Change: Appreciating Differences
Theories frequently reduce complex phenomena to their basic parts: organizational theories such as the Change Formula are no exception and sometimes treat their subject wholesale. However, not all organizational change is created or perceived to be equal, this within and across the entities that experience it. Focusing on the internal organization, Burke (2014) identified three separate yet overlapping levels at which organizational change differs. (In an increasingly interconnected world, I believe that one should add the interorganizational level: the partnerships and strategic alliances that organizations strike routinely demand consideration of the possible impact of organizational change outside the boundaries of the initiating organization sensu stricto ) At the level of the individual, for instance, attention typically focuses on selection, onboarding, displacement, and replacement; learning and development; as well as coaching and mentoring; at the level of the group, attention concentrates on, say, self directed work, team building, and intergroup collaboration; at level of the system, attention spans mission, strategy, structure, systems, and organizational culture and consequently demands careful consideration of the focus, order (e.g., first , second , or third order), processes (e.g., large group interventions, survey feedback, etc.), and phasing of change (Burke, 2014).
Consequently, it follows that individual, group, and system level responses to organizational change cannot be the same (and before that, of course, that the corresponding change applications cannot either). At the level of the individual, Burke (2014) explained that organizational change can be welcomed, ignored if possible, or resisted. Resistance can be of the blind variety, meaning, that some people simply cannot tolerate any kind of change; it can be political; or it can be ideological Burke (2014). At the level of the group, organizational change can fall prey to turf warfare, the closing of ranks, the shifting of alliances (or ownership), or demands for new leadership (Burke, 2014). At the level of the system, a change effort can peter out: the sense of urgency is insufficient (as people intentionally sit out or expect that "This too shall pass"); or, some organization members sabotage the plan (Burke, 2014). In cases where there is no effective opposition to it, organizational change can also be abandoned out of impatience or because of pressure for an instant payoff before it has had a chance to take root and yield results; or, its focal point is allowed to drift over time (Serrat, 2009b)
Resistance (or acceptance) at individual, group, and system levels will necessarily be conditioned by content (viz., what to change) and, especially, process (viz., how to change). Many economic, environmental, political, social, and technological factors impact content; however, only four schools of thought have to do with the process of change, viz., life cycle (organic growth), teleological (purposeful cooperation), dialectical (opposition, conflict), and evolutionary (competitive survival) theories (van de Ven & Poole, 1995; Burke, 2014) Although most related approaches such as Lewin's Three Steps (Unfreezing, Changing, Refreezing) or Kotter's 8 Step Change Model in the case of system level change are formulated as the be all and end all of change "technology", I do not think it should be the case that they cannot be considered at the same time. " It doesn’t matter whether the cat is black or white, as long as it catches mice," Deng Xiaoping remarked (McGovern, 2005, p. 261). What is more, since theories are wont to overlap, two or more cats may be better than one (Serrat, 2021b). Besides, there may be a need to add a fifth school of thought to account for organizations that transform themselves out of their original business through mergers, acquisitions, and other means;
Western Union (previously a telegraph company), Nokia (once a manufacturer of rubber boots), and Shell (originally an antiques and collectibles shop that later diversified by selling decorative oriental seashells) come to mind
Over and above the "what" and "how" of change "why" an organization should change must be considered the primary determinant of reactions at individual, group, and system levels. ("What" and "how" are but functions of "why".) At any level of an organization, both firstly and ultimately, acceptance of or resistance to change is quite apart from the business of communication conditioned by perceptions of the need for it, be it in relation to the "burning platform" metaphor or, preferably, based on mindful consideration of the future an organization's shareholders, stakeholders, and partners want, jointly, to create (Serrat, 2010b) To fully embrace and deliver change ideally (and if possible) by co creating it through, say, Future Search or appreciative inquiry one must be involved at all levels before it even begins (Serrat, 2008, 2012)
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