PART 6 – STRATEGIC CHANGE INTERVENTIONS

The focus of the interventions in Part 6 is on the whole system—on organization development.
 These change programs are ―strategic‖ in that they are:
o intended to change the relationship between an organization and its environment, and
o intended to affect outcomes at the organization level, including sales, profitability, and culture.

 These interventions involve changing the strategy and/or design of a single organization or combining or
orchestrating the activities of multiple organizations.

Chapter 18 | Transformational Change

I. TRANSFORMATIONAL CHANGE
This chapter describes transformational interventions.

These change processes bring about important alignments between the organization and its competitive environment and
among the organization’s strategy, design elements, and culture.

They are initiated in response to or in anticipation of major changes in the organization’s environment or technology. As
a result, these changes often trigger significant revisions in business strategy, which, in turn, may require
modifying internal structures and processes to support the new direction. Such fundamental change entails a new
paradigm for organizing and managing the organization; it requires qualitatively different ways of perceiving, thinking, and
behaving. Movement toward this new way of operating requires senior executives to take an active leadership role.

The change process is characterized by considerable innovation as members discover new ways of improving the
organization and adapting it to changing conditions.

Transformational change means alterations in certain areas which is caused due to an interaction with the environmental
factors and creates a need for new behaviors or changes in the behaviors of the organizational employees.

Transformational change refers to changes in specific areas caused by an interaction with environmental factors, which
creates a need for new behaviors or changes in the behaviors of organizational employees.

According to Jick and Peiperl (2003:218), a transformation is referred to as organizational reorientation. Cummings and
Worley (2001:498) and Grobler (in Verwey & Du Plooy-Cilliers, 2003:192), viewed transformational change as paradigm
modifications both at the individual and organizational levels. They equally viewed transformational change as the major
task of the leaders of the present scenario, from which emanates the term transformational leaders.
The model above shows the interrelationship between the entire scope of transformational factors on the organizational
performance and change. It shows that the organizational change is affected by the external environment which includes
factors like competitive forces, technological innovation and government rules & regulations.

Even the role of transformational leaders in the era of fast transformation has also been discussed through this model.
The transformational leaders play a crucial role in organizational transformation and help in responding to the forces of the
external environment by proactively assessing the challenges from the external environment and accordingly developing
and implementing strategic interventions. Given below is a description of each factor presented in the model:

External Environment: It constitutes the external factors or situations that influence the organizational performance like
the worldwide economy, political/government factors and the legislations.

Mission and Strategy: Mission is the reason for existence of the organization and strategy constitutes the road map of
action and how the organization achieves its goals/purpose over a period of time. A written mission statement guides the
employees in their pursuit of organizational excellence.

Leadership: Leaders provide direction and guidance to the employees for behaving and performing in expected ways.

Organizational Culture: Culture of an organization influence the behaviour of the employees and the way the employees
do things.

Structure: Structure describes the hierarchical pattern in an organization, levels of responsibility and the arrangement of
functions, authority for making decisions, communication patterns and relationship for ensuring effective implementation
of the organizational strategy and realization of goals.

Ten Pre-Requisites for Transformational Change as per Beckhard

1. Ensuring the commitment of the senior management towards the change, this should even be visible to all the
organizational members.
2. Producing a written mission statement and the futuristic vision/direction of the organization which may provide
guidance on the objectives, policies and values.
3. Building a shared awareness and change in the perception of the employees regarding the need for change.
4. Selecting a team of key managers and opinion formers who will be playing a crucial role in gaining the commitment of
the employees towards the change and in disseminating the change widely across the organization.
5. Generating an acceptance towards the overall process of change and the entire process of transformation.
6. Developing an understanding that resistance to change is inevitable and it needs to be managed effectively.
7. Educating and training the participants regarding the necessary competencies required for effectively overcoming the
resistance towards the change and winning their commitment.
8. Taking steps for avoiding the blames or any kind of negative behaviour which may generate any kind of resistance
towards the change.
9. Using appropriate resources for facilitating this entire process of transformation or change.
10. Maintaining open channels of communication regarding the key processes, failures, challenges and the learning from
the new initiatives.
In a nutshell, transformational change has been described from different perspectives.

According to Head (1997), transformational change refers to change in the structure, culture and key processes of an
organization.

As per Chapman (2002), transformational change requires changes in the attitude, beliefs and values of the employees.

As per Stace and Dunphy (2001), transformational change involves a redefinition of the overall organization’s strategies,
gaining the employees commitment towards the process of transformation and reorienting the culture of the entire
organization.

In the view of Nadler and Tushman (1989) transformational change is a time-consuming process and requires
comprehensive coordination and complete support from the management for effective outcomes.

II. INTERVENTIONS
1. Organization Design
Organization design configures the organization’s structure, work design, human resources practices, and management
processes to guide members’ behaviors in a strategic direction. This intervention typically occurs in response to a major
change in the organization’s strategy that requires fundamentally new ways for the organization to function and members
to behave.
a. Conceptual Framework

It highlights the idea that the organization is designed to support a particular strategy (strategic fit) and that the different
design elements must be aligned with each other and all work together to guide members’ behavior in that strategic
direction (design fit). Research shows that the better these fits, the more effective the organization is likely to be.24 These
design components have been described previously in this book, so they are reviewed briefly below.

b. Basic Design Alternatives

 mechanistic, supporting efficiency and control,
 organic, promoting innovation and change.

 Mechanistic designs have been prevalent in organizations for over a century; they propelled organizations into
the industrial age. Today, competitive conditions require many organizations to be more flexible, fast, and
inventive. Thus, organization design is aimed more and more at creating organic designs, both in entirely new
start-ups and in existing firms that reconfigure mechanistic designs to make them more organic.

 Designing a new organization is much easier than redesigning an existing one in which multiple sources of inertia
and resistance to change is likely embedded.

 As shown in Table 18.1, a mechanistic design supports an organization-strategy emphasizing cost

minimization, such as might be found at Carrefour and McDonalds or other firms competing on price.

 The organization tends to be structured into functional departments, with employees performing similar tasks
grouped together for maximum efficiency. The managerial hierarchy is the main source of coordination and
 control. Accordingly, work design follows traditional principles, with jobs and work groups being highly
standardized with minimal decision making and skill variety.

 Human resources practices are geared toward selecting people to fit specific jobs and training them periodically
when the need arises. Employees are paid on the basis of the job they perform, share a standard set of fringe
benefits, and achieve merit raises based on their individual performance.

 Management processes stress centralized decision making, with power concentrated at the top of the
organization and orders flowing downward through the chain of command. Similarly, communication and goal
setting systems are driven from the top. Information is not widely shared. When taken together, all of these design
elements direct organizational behavior toward efficiency and cost minimization.

 Table 18.1 shows that an organic design supports an organization strategy aimed at innovation, such as might
be found at 3M, Google, and Unilever or other firms competing on new products and services.
 All the design elements are geared to getting employees directly involved in the innovation process, facilitating
interaction among them, developing and rewarding their knowledge and expertise, and providing them with
relevant and timely information.
 Consequently, the organization’s structure tends to be flat, lean, and flexible like the matrix, process, and
network structures described in Chapter 12.
 Work design is aimed at employee motivation and decision making with enriched jobs and self-managed teams.
 Human resources practices focus on attracting, motivating, and retaining talented employees. They send a
strong signal that employees’ knowledge and expertise are key sources of competitive advantage. Members are
selected to fit an organization culture valuing participation, teamwork, and invention. Training and development
are intense and continuous. Members are rewarded for learning multiple skills, have choices about fringe benefits,
and gain merit pay based on the business success of their work unit.

 Management processes are highly participative and promote employee involvement. Communication systems
are highly open, inclusive, and transparent providing relevant and timely information throughout the organization.
In sum, these design choices guide members’ behaviors toward change and innovation.

c. Worldwide Organization Design Alternatives

 An important trend facing many business firms is the emergence of a global market place.

 Driven by competitive pressures, lowered trade barriers, increased knowledge work, and advances in information
technologies, the number of companies developing or offering products and services in multiple countries
continues to rise.

 Worldwide organizations28 offer products or services and actively manage direct investments in more than one
country; must balance product and functional concerns with geographic issues of distance, time, and culture; and
must carry out coordinated activities across cultural boundaries using expatriates, short-term and extended
business travelers, and local employees.

 They must relate to a variety of demands, such as unique product requirements, tariffs, value-added taxes,
governmental and environmental regulations, labor practices, transportation laws, and trade agreements, and
adapt their human resources policies and procedures to fit different cultures.
  The International Design The international design exists when the key success factors of global integration and
local responsiveness are low.
 The Global Design This design is appropriate when the need for global integration is high but the need for local
responsiveness is low.
 The Multinational Design This design is appropriate when the need for global integration is low, but the need for
local responsiveness is high. The decision to favor local responsiveness over global integration must be made.
 The Transnational Design This orientation exists when the need for global integration and local responsiveness
are both high.

d. Application Stages

1. Diagnosing the current design.

2. Designing the organization.
3. Implementing the design.

2. Integrated Strategic Change

Integrated strategic change (ISC) is an OD intervention that extends traditional OD processes into the content-oriented
discipline of strategic management and describes how to conduct a systemic and revolutionary change program. It is an
intentional process that leads an organization through realignment between the environment and a firm’s strategic
orientation, and that results in improvement in performance and effectiveness.

a. Implementing the ISC Process

1. Performing the strategic analysis.

2. Exercising strategic choice.
3. Designing the strategic change plan.
4. Implementing the plan.
 3. Culture Change

A growing number of managers appreciate the power of corporate culture in shaping employee beliefs and actions. A
well-conceived and well-managed organization culture, closely linked to an effective business strategy, can mean the
difference between success and failure in today’s demanding environments.

a. Defining and Diagnosing Organization Culture

OD practitioners have developed a variety of culture definitions and number of culture change interventions.

Artifacts Most cultural assessments include descriptions of surface-level artifacts. Artifacts are the visible symbols of the
deeper levels of culture, such as norms, values, and basic assumptions. They include members’ behaviors, clothing, and
language; the organization’s design features, including structures, systems, and processes; and the organization’s
physical arrangements, such as décor, office space layouts and appointments, and noise levels.

Norms and Values A deeper level of cultural diagnosis can occur by focusing on the norms and values level of culture.
Just below the artifact level of cultural awareness are norms guiding how members should behave in particular situations.
These represent unwritten rules of behavior. Norms generally are inferred from observing how members
behave and interact with each other.

Deep Assumptions of Culture Finally, OD practitioners have a couple of options for understanding the deep
assumptions level of culture. The deepest level of cultural awareness are the taken-for-granted assumptions about how
organizational problems should be solved. These basic assumptions tell members how to perceive, think, and feel about
things. They are nonconfrontable and nondebatable assumptions about relating to the environment and about human
nature, human activity, and human relationships.

b. Implementing the Culture Change Process

1. Formulate a clear strategic vision.

2. Display top-management commitment.
3. Model culture change at the highest levels.
4. Modify the organization to support organizational change.
5. Select and socialize newcomers and terminate deviants.